Equity Market Breadth

Market breadth measures the direction of the boarder market and reveals whether popular indices are in gear with the more narrowly constructed market averages. When price and breadth fail to confirm, it creates a positive or negative divergence. Divergences imply a disconnect between price and energy within the trend.

Long-term market breadth indicators such as my ADN (similar to Advanced/Decline ratio) and NetHiLo% reveal a positive divergence with price. ADN and NetHiLo% have recently recorded new all-time highs while price remains below its 2007 high.

Bear in mind that this analysis applies only to the nominal rather than real stock prices. The results, nonetheless, reveal an interesting perspective of the trend's internal energy.

ADN:


NetHiLo%: