Market Breadth Primer

Market breadth analysis is often recognized as a long term market timing tool. It is far from the truth.

Market breadth is the study of a market class. When the study is done on the stock markets, it is the breadth analysis of stock markets. When the study is done on the commodities, it is the breadth analysis of the commodity markets.

The study can be analysis of micro activities within the class that results in useful short term bias. It can also be analysis of daily closing price behaviour or other metrics that are useful for long term outlook.

This is an ongoing series focus on advanced market breadth analysis techniques.

We have a set of custom market breadth charts updated daily for the US stock market indices.
Check it out at Daily Market Breadth Monitor (US Indices)

Market Breadth Analysis Introduction
Market Breadth Primer: Introduction

This is a long due series I promised to cover. I was waiting for a good time to gather my thoughts and summarizing them into drafts. Well there was never a good time and probably never will if I keep stalling. So here it is, first piece on the subjec ...

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Market Breadth Primer: Advance / Decline Issues  member only

Advance Issues is the number of stocks traded above their previous trading day close within a particular basket. For example, New York Stock Exchange provides the advance issues data across all the stocks traded on its board throughout the day. That ...

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SPX Long Term_20130325_224149
Market Breadth Primer: Advance / Decline Issues Past and Present

Market breadth analysis is a lesser known analysis tool comparing to price patterns or technical indicators. As there are not many technical papers and books written on the subject, most people would have no choice but to refer to the older informati ...

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ES CHADTP_20130427_144354
Market Breadth Primer: CHADTP Past and Present

This article is going to show you an example on the change in characteristics of the Advance / Decline Issues affecting trading models based on the breadth data. The example system I am going to use is called Conner Hayward Advance Decline Trading Pa ...

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ES Advance Decline Patterns_20130516_122713
Market Breadth Primer: Advance / Decline Spike Low

An interesting usage of advance / decline issues is to identify the market extremes. Here is one setup that has emerged as one of the best short term bottom picking signals since year 2000. Following chart marks the points where the signal occurred. ...


Market Breadth Primer: Hindenburg Omen

Hindenburg Omen is a market breadth driven pattern. It is made famous when it has successfully forewarned several times in history on serious stock market sudden corrections. I am going to explain the concept with common sense so that you can make in ...

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Market Breadth Primer: Custom Market Breadth Components Resources

In order to construct and maintain custom market breadth data, you need access to the latest list of components for the target baskets in order to collect the statistics properly. Following are resources you may find useful if you maintain your own c ...

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Basket of river stones
Market Breadth Primer: Broad Based Market Breadth vs. Custom Market Breadth

Broad Based Market Breadth are general statistics collected across a large group of tradable instruments with no specific focus. Custom Market Breadth refers to statistics collected on a specialized basket of tradable instruments with either conven ...

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Market Breadth Primer: Component Changes And Their Effects

Stock market indices are calculated from a basket of components. These components, however, are not always the same. Components are changed for many reasons. Contrary to what many conspiracy theorists say, majority of these reasons are legit. I am go ...


Market Breadth Primer: S&P 500 Historical Constituents Change History

Unlike Nasdaq 100 and other indices managed by various exchanges, information on the S&P family of stock market indices are proprietary. That means all kinds of information about the S&P indices are not public information and that such inform ...


Assorted pills
Market Breadth Primer: Nasdaq 100 Historical Constituents Change History

Nasdaq-100 (NDX) is one of the most followed index worldwide. Many derivative products are created around the index itself to allow participations in its rise and fall all around the world. Unlike S&P 500, Nasdaq-100 does not require a company to ...

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Basket of river stones
Market Breadth Primer: S&P 100 Historical Constituents Change History

S&P 100 (OEX) is a subset of the S&P 500 Index containing the top 100 most valuable companies within the S&P 500. This index has long been used for the construction of financial derivatives like index options for decades. The most well kn ...

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Market Breadth Primer: Detective Tools

I mentioned that the most reliable source for tracking index component changes is the public record of press releases. Here is an example how to search for these records online. Find The Press Release Agency From the index owner website, you can a ...

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Old Greek Inscription
Market Breadth Primer: The VIX Phenomenon

Majority of option traders who understand options tend to focus on the mathematics of VIX while the chart traders who trade S&P 500 Index futures tend to focus on the chart patterns and confirmation signals from VIX. Who is right? Who understan ...


Display of Waveforms
Market Breadth Primer: Forex Majors And Their Surprising Correlations With Historical Volatility  member only

Traders often talk about volatility. Many brokerages even offer volatility reports on various timeframes across all the forex pairs as a service to their clients. People talk about volatility because they think that if they know something about the v ...

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Market Breadth Primer: Advance / Decline Issues Bull Charge (Signal ID: AD Bull Charge)  premium content

Advance / Decline Issues Bull Charge is a day trading model based on real-time advance / decline issues only. It is not only a very consistent mechanical trading model. It is also a very useful trading setup because it helps the traders to realize th ...


Market Breadth Primer: Advance Decline Line Explained

Many traders have heard of Advance Decline Line. It is even reported in major financial news media. Most of the time, people focus on the divergence of the index levels against the Advance Decline Line as signals to potential trend change. This is no ...

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A Robust Method To Interpret Advance Decline Issues

Advance Decline Issues, by its very natural, is noisy. Its values can be jumpy from day to day making it hard to interpret the information offered by the market breadth data. I am going to demonstrate a neat way to utilize the data that overcome the ...

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histogram with Gaussian distribution on blackboard
Market Breadth Primer: Advance / Decline Ratio and Advance Issues Percentage Conversion

Different data feeds offer different favour of the advance decline data to their customers. However, not all trading platforms are capable of letting the users to conduct calculations directly from multiple data series. Hence, odd combinations of the ...

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Market Breadth Primer: Market Breadth Analog Forecasting Method

Classic approaches to the interpretation of market breadth data are mainly based on signal generation and recognition of outlier events. The reason for market participants to do that is obvious – the indicator got to produce something of immediate ...

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Market Breadth Primer: VIX Phenomenon 2017 Edition

I wrote about the Volatility Index (VIX) several years ago explaining why it behaves the way it is. I also presented the idea that understanding the players in the trading game is more important than focusing just on the technical details like the Gr ...

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What We Can Learn from a Simple Yet Robust Mechanical VIX Based Swing Trading Strategy  member only

Many traders love to know how to utilize various market breadth statistics to improve their trading. However, majority of the narratives out there are all guess work based on visual inspection and speculation on how a market breadth statistics can be ...

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