Breadth Indicators consists of a Mathematical formula that uses advancing and declining issues to calculate the amount of participation in the movement of the stock Market. By evaluating how many stocks are increasing or decreasing in price and how many trades investors are placing for these stocks, breadth indicators can show whether overall market sentiment is bullish (positive market breadth) or bearish(negative market breadth). Investors can also use breadth indicators to evaluate the behavior of a particular industry or sector, or to analyze the magnitude of a rally or retreat.
In short Market breadth is a ratio that compares the total number of rising stocks to the total number of falling stocks.
Breadth Indicators provide one of the best ways of calling Intermediate market tops and bottoms. Breadth Indicators measures the number of stocks with rising trends within a particular Index in order to gauge the amount of participation in that index.
Some of the breadth indicators used by Technical analysts are..,
- Force Index
- Chaikin Oscillator
- Up/down volume ratio
- Up/down volume spread
- On-Balance volume
- Cumulative volume Index
- Arms Index