Glossary term
Market Breadth
How many stocks are participating in a market move — advance-decline line, new highs vs new lows, the share of stocks above the 200-day moving average. A narrow rally carried by a handful of mega-caps is structurally fragile; broad breadth confirms regime strength. Closelook feeds breadth into the Money Temperature composite.
Definition & Context
Market breadth measures participation. An index can rise 2% because three mega-caps ripped 10% while 400 stocks declined, or because 350 stocks closed higher by 1–2%. The headline number is identical; the meaning is not. Classic breadth gauges include the NYSE Advance-Decline line, the percentage of stocks above their 200-day moving average, cumulative new 52-week highs minus new lows, and the McClellan Oscillator. Breadth divergences — index at new highs while the A-D line sags — have preceded most meaningful tops since the 1970s.
Breadth degrades as a cycle matures. Early bull markets lift nearly everything; late bull markets become narrow leadership stories (1999 tech, 2023 Magnificent-7). Breadth thrusts — rare conditions where more than 90% of stocks trade above their 50-day MA — have historically marked durable regime shifts off bear-market lows. Because breadth is slow-moving relative to price, it is used as a confirmation signal rather than a timing signal.
Why It Matters for Investors
Thin leadership is a risk factor that index charts hide. Closelook’s Money Temperature uses breadth as one of eight macro instruments: when the composite sees weakening breadth while price holds, the temperature score shifts toward caution even before volatility picks up. The Rubin Build-Out 100 — structurally narrow because it sits in one thematic — is reported alongside a breadth overlay so users can see whether the AI-infrastructure rally is broad or leader-driven.
Related Concepts
Breadth is a core input to Money Temperature and informs Market Regime classification. Narrow breadth around Sentinel Tickers is one of the oldest warning signs at tops.