Market Breadth Indicators

Market breadth indicators (also known as market internal indicators stock market indicators, or just breadth indicators) are tools that investors can use to help determine the strength of the direction of the stock market.  Stock market breadth indicators are derived from price and/or volume data of each of the stocks in the group being studied.  Market breadth indicators are a form of technical analysis applied to groups of stocks to come up with an aggregate view of how many stocks are participating in a markets trend.

Market breadth indicators are applied to groups of stocks, not individual stocks, although they do use the data from each of the individual stocks in the group being studied.  While this may sound confusing, an example will help to clarify how market breadth indicators work.  Lets say you are studying the S&P 500 index, the index has been going up, and you want to know if this price trend is being driven by just a few large cap stocks, or if it is a stronger trend representing upward price moves in many stocks within the index.  To determine this, you compare the closing price of each stock today with it’s closing price yesterday, and then tally each stock that rose in price, which gives you a view of the advancing issues market breadth indicator.  Obviously, the more stocks that are moving up in price (in this example), the stronger the uptrend.

While there are many market internal indicators, many of the popular breadth indicators are primarily derived from the following three data sources within the stock market index being studied:

• Number of stocks advancing/declining in price
• Volume of stocks traded that are advancing/declining in price
• Number of stocks making new highs/lows in price

Here are some of my favorite market breadth indicators for some popular stock market indexes:

S&P 500

• S&P 500 stocks trading above 200 day moving average
• S&P 500 stocks trading above 50 day moving average
• S&P 500 stocks trading above 40 day moving average
• S&P 500 stocks trading at new yearly highs
• S&P 500 stocks trading at new yearly lows

NASDAQ 100

• NASDAQ 100 stocks trading above 200 day moving average
• NASDAQ 100 stocks trading above 50 day moving average
• NASDAQ 100 stocks trading above 40 day moving average
• NASDAQ 100 stocks making new highs
• NASDAQ 100 stocks making new lows

Dow Jones Industrial Average (DJIA)

• Dow Jones Industrial Average (DJIA) stocks trading above 200 day moving average
• Dow Jones Industrial Average (DJIA) stocks trading above 50 day moving average
• Dow Jones Industrial Average (DJIA) stocks trading above 40 day moving average
• Dow Jones Industrial Average (DJIA) Stocks Trading at New Yearly Highs
• Dow Jones Industrial Average (DJIA) Stocks Trading at New Yearly Lows

I will add more market breadth indicators to this list as time allows.  If you have a suggestion for a market breadth indicator that you would like to see added, please submit a comment on the form on this page.

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