18. A Compendium of Breadth Indicators

“I began trying, first of all, to gauge what the key elements of bull and bear markets are, because no matter what stock you buy, it’s the market you’re in that will probably dictate how successful you are in any specific stock purchase.”

—Jeffrey S. Weiss, CMT

Market breadth is a close cousin to volume. Both volume and breadth are concerned about one primary piece of information: participation. Like volume, market breadth has everything to do with quantities. Whereas volume indicates the number of shares traded, market breadth gets even more specific by indicating the number of securities traded that meet a specific set of market statistics. The term breadth usually refers to width, or broadness. Market breadth refers to how broad or wide the market is, not as a whole, but rather as groups of individual issues. By perceiving the market as a market of markets, you can gain a much better understanding of the depth of the market’s overall trend. This information might be useful in gauging the internal strength of the market. Numerous methods are used to measure market breadth.