Market breadth refers to how many stocks are participating in a given move in an index or on a stock exchange. An index may be rising yet more than half the stocks in the index are falling because a small number of stocks have such large gains that they drag the whole index higher. Market breadth indicators can reveal this and warn traders that most stocks are not actually performing well, even though the rising index makes it look like most stocks are doing well. An index is an average of the stocks in it. Market breadth attempts to find how much underlying strength or weakness there is in a given stock index. By assessing the strength or weakness which isnt plainly visible by looking at a chart of the index, technical traders gain insight into what the index may do next. A large number of advancing stocks is a sign of bullish market sentiment and is used to confirm a broad market uptrend. A large number of declining stocks shows sentiment is bearish, which would align with an index downtrend.
Note We calculate the historical data based on the current index entries.
|MA Spread (1)
||By calculating the 50-day moving average of an asset and the according standard deviation (σ), we can see how far the current close is away from the moving avaerage. An asset is oversold if the current close is below 1 to 2 standard deviations away from its moving average. Hence an asset is extremly overbought if the close is more than 2 standard deviations above the moving average.
|MA Spread (2)
||For a list view we can simply take the number of assets that are overbought (OB), hence > 1σ and oversold (OS), hence < -1σ and show there distribution over time as well as the rate of change.
|Market breadth rising stocks
||In easy words, we calculate a value very similar to the MACD for each asset in an index. The average of the number of positive values is the calculated as well as moving average. As long as the value is above the ma, the majoroty of assets is rising.
|adj. McClellan Oscillator
||The McClellan Oscillator is a market breadth indicator developed by Sherman and Marian McClellan. It is based on the difference between the number of rising and falling periods. When it rises, the rising periods gain the upper hand so that the overall market rises and vice versa.
|Adv Dec 18%
||The Advance/Decline Line (AD Line) is a breadth indicator which is calculated by taking the difference between the number of advancing and declining issues and adding the result to the previous value. We use a moving average here of the value.