CUSTOM BREADTH INDICATORS
In its most basic form, Market Breadth indicators analyze the number of stocks advancing relative to those that are declining or the number of stocks producing new highs vs the number of stocks producing new lows.
We use 8 custom Market Breadth indicators, in various time frames including;
- Advance Decline Percent;
- Volume Advance Decline;
- New High, New Low Percent;
- Percentage of Stocks Above a Moving Average;
We perform these calculations across the following areas of the market;
- US and Canadian Indexes,
- US and Canadian Sectors;
- US Industry Groups;
- Global Markets;
- Europe Far East and Australia Asia (EAFE) Markets and;
- Emerging Markets (EEM);
Our primary Breadth indicators are displayed by a Binary Ribbon at the bottom of Weekly Price Charts. The chart below illustrates our Custom Breadth Indicators on the S&P 500 Large Cap Index.
Our Binary Breadth Ribbon illustrates whether a breadth indicator resides on either a Bullish (green) or Bearish (red) breadth trigger. Similar to the Heat Map MMR, we are looking for the Weight of the Evidence. Breadth would be considered Net Bullish when there are more than 4 Bullish Breadth Indicators. Breadth would be considered Net Bearish when there are more than 4 Bearish Breadth Indicators. We would consider market breadth to be indecisive when there are four bullish and 4 bearish indicators present.
While reviewing all of our market breadth indicators on a weekly basis may not be possible, we have developed a concise way to view the posture of our Breadth Indicators on one screen. The image below illustrates our Market Breadth Scoreboard on the TSX Major Index’s and sectors as of the close on March 6, 2020. From a click look at our Breadth scoreboard, we can quickly determine strong or weak index’s, sectors and industry groups.
