Glossary / Macro & regime

Market breadth

Also called: breadth · advance-decline

Market breadth measures how widely a market move is shared across the securities in it, rather than how far the index itself has travelled. It answers whether an index move reflects most of its members or a concentrated few.

How it is measured

How is market breadth measured?

Common measures include the count of advancing securities against declining ones, the running total of that difference as an advance-decline line, the share of members trading above a longer moving average, and counts of new highs against new lows. Each is computed over a defined universe, and the choice of universe changes the answer — an equal-weighted view and a capitalisation-weighted view can disagree sharply.

Why it matters

Why does market breadth matter to a swing trader?

Breadth separates a broad advance from a narrow one, which matters because a capitalisation-weighted index can rise on a handful of very large members while most of its constituents are flat or falling. For a swing trader picking individual securities, that distinction bears directly on how representative the index is of what any given name is doing. Breadth is a description of current participation, not a leading indicator, despite frequently being presented as one.

Related

See this in the product

The live market regime view · Full methodology

Related terms

Market regime
A market regime is a broad classification of prevailing market conditions into a small set of named states — risk-on and risk-off being the most common pair, sometimes with a neutral state between them.
Sector rotation
Sector rotation describes a shift in which parts of the market are moving most, as capital concentrates in some sectors and thins out of others over weeks or months.
VIX
The VIX is an index of the volatility expected over the next 30 days in the S&P 500, derived from the prices of that index's options.
Relative strength
Relative strength is a difference, not a standalone reading: a security's price change over a period, minus a benchmark's price change over exactly the same period.

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General information about market vocabulary, written to be descriptive rather than prescriptive. Not investment advice — see the risk disclosure.