Market breadth

Advance-decline measures, new highs/lows, thrusts, and breadth divergence.

Market breadth

Index price against advance-decline participation — broad versus narrow moves

| Concept | Explanation | |---|---| | Advance-decline line | Cumulative difference between advancing and declining securities. | | Advance-decline divergence | Index movement is not confirmed by participation. | | New highs versus new lows | Compares securities reaching new highs with those reaching new lows. | | Breadth thrust | Rapid, broad improvement in advancing participation. | | Percentage above moving average | Share of securities trading above a selected trend threshold. | | Breadth divergence | The index and underlying participation move in different directions. |

Capitalization-weighted indices can rise because a small number of large companies advance. Breadth reveals whether the move is broad or concentrated.

Module knowledge check

  1. Why is rising price with falling volume treated cautiously?
  2. What does ATR measure?
  3. Why does a squeeze not predict direction?
  4. How can an index rise while breadth weakens?

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