Breadth of Market Theory

DEFINITION of 'Breadth of Market Theory'

A technical analysis theory that predicts the strength of the market according to the number of stocks that advance or decline in a particular trading day.

BREAKING DOWN 'Breadth of Market Theory'

The breadth of market indicator is used to gauge the number of stocks advancing and declining for the day. If the breadth indicator is strong, this theory predicts that the market will be rising and vice versa.

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RELATED FAQS
  1. Why is the Breadth Indicator useful for tracking the overall economy?

    See how analysts might use technical breadth indicators to judge the health of the economy as a whole, and learn why one ... Read Answer >>
  2. How can I use market breadth to my advantage?

    Market breadth is a study that compares the number of companies on a given exchange that have created new 52-week highs to ... Read Answer >>
  3. Why is it important for traders and investors to follow market indicators?

    Learn about market indicators such as the Advance/Decline Index and market breadth. Discover why these indicators are so ... Read Answer >>
  4. How do I build a trading strategy using the Cumulative Volume Index - CVI?

    Find out how traders and analysts make use of the cumulative volume index, a technical breadth indicator, within their trading ... Read Answer >>
  5. What is the chaos theory?

    The chaos theory is a complicated and disputed mathematical theory that seeks to explain the effect of seemingly insignificant ... Read Answer >>
  6. Why is the Toraku Index important for analysts of the Tokyo Stock Exchange?

    Learn how the Toraku Index is used to predict market trends on the Tokyo Stock Exchange, and understand how market breadth ... Read Answer >>
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