What's a market breadth?

Market breadth is defined by the fraction of advancing and declining securities in the market. Variety of market breadth indicators, such as A/D Line, A/D Ratio, Arms Index, McClellan Oscillator and others, are designed to help traders and investors evaluate the current state of the selected market. Looking at these indicators allows traders to reduce the impact of the large caps stocks which influence market indices the most, and instead examine price trends of a diverse range of stock.

The majority of the market breadth indicators fall into the two categories: divergence indicators and overbought/oversold indicators. The divergence indicators work by comparing two graphs and detecting a divergence in the directions of both. An example from this category is A/D Line indicator. While a market index such as DJIA is still trending up but A/D Line reversed and is declining, then there is a good chance that the market index itself is about to reverse it’s direction.

A good example from the overbought/oversold category is A/D Ratio indicator. Just like with any other oscillator you would expect the index to reverse up when indicator is crossing oversold level and reverse down when indicator is crossing overbought level.

Market breadth in EZQuote

Beginning with version 1.06 EZQuote offers in-built market breadth calculator. This tool allows the user to calculate the market breadth data, such as number and volume of advanced and declined issues, number of new highs and new lows, etc. This data later could be used to build a variety of market breadth indicators. EZQuote is shipped with already pre-built few market breadth indicators ( A/D Line, A/D Ratio, McClellan Oscillator, McClellan Summation Index, Arms Index, Breadth Thrust, Cumulative Volume Index, New Highs New Lows Difference ).

Although the market breadth data, such as numbers of advanced/declined issues, is available for free from the web, the historical market breadth data requires additional subscription fees charged by data providers. EZQuote gives you an advantage to create your own market breadth data free of charge. The other advantage of building your own data is that you are not limited to the few predefined groups of securities, such as NYSE exchange listing or NASDAQ exchange listing. With EZQuote you can build and analyze market data for any sector or industry. You are free to create your own group of securities and use market breadth indicators to analyze it.

Unlike other software packages, EZQuote has very flexible options handling security selection for your market breadth calculations. Other packages would just ignore the securities which don’t fit into specified date range, where as EZQuote would let you adjust the range to include most of the securities.

Not only EZQuote brings you the most recent quotes from more than 20 exchanges all over the world, it provides you with valuable tools to give you an edge in your trading.