Beginner
What It Means
An index can rise for two very different reasons: because most of its stocks are rising, or because a few giant stocks are rising enough to drag the average up while the typical stock goes nowhere. Breadth tells the two apart.Example
Imagine an index at a new high while the median stock in it is below its own recent high. The advance is narrow: a handful of mega-caps are doing all the lifting. Now imagine the same index level reached with most stocks advancing together, same headline, far sturdier foundation.Why It Matters
Breadth shows how widely a market move is shared. An index rising while the median stock falls has concentrated leadership. Broadening participation provides additional support for the trend; narrowing participation highlights its dependence on fewer constituents.Advanced
How to Read It
In the reports, breadth appears as a component of the composite market-sentiment score and in the sector and market internals discussion. “Deteriorating breadth” during a rising market is a caution flag, the index is being carried by fewer shoulders. Improving breadth during a recovery is a sign the move has foundations.Common Misreadings
- Treating narrow leadership as an immediate sell signal: narrow markets can stay narrow for long stretches, breadth is a fragility measure, not a timer
- Reading breadth without the index: falling breadth in a falling market is ordinary; falling breadth in a rising market is the pattern worth attention, the divergence carries the information
- Equating breadth with sector rotation: rotation moves leadership between groups; breadth measures how many stocks participate at all, a market can rotate healthily or narrow unhealthily, and the sector analysis section distinguishes the two
Reading It Against the Other Measures
Breadth is the participation check on momentum: a strong trend confirmed by broad participation deserves more trust than the same trend carried by a few names. When the reports pair a positive sentiment reading with a breadth-led warning, that pairing is deliberate.Related Terms
Composite Market-Sentiment Score
Where breadth is a component
Momentum
The trend breadth confirms or questions
Sentiment Regime
The classification breadth feeds