Market X-Ray · Toolbox 3
Ratio-Quality Decomposition
A rising ratio is ambiguous. IWM/SPY can rise because small-caps led — or because the S&P fell. This decomposes every structural ratio into what the numerator did versus the denominator, and scores how meaningful the move is: numerator-driven and consistent across horizons = high quality; denominator-driven or one-horizon = low quality, mechanically misleading. Quality is reliability, not direction.
Updated daily · data as of 2026-07-17
Alerts — misleading strength & real weakness
Internet Participation rising mainly because XLK fell sharply — a mechanically misleading improvement.
- Ratio +5.7% over 21d
- Quality score 4/100 (Denominator collapse)
- Denominator-driven (95% of the move)
Credit Breadth rising mainly because LQD fell sharply — a mechanically misleading improvement.
- Ratio +1.1% over 21d
- Quality score 1/100 (Denominator collapse)
- Denominator-driven (99% of the move)
Semiconductor Leadership falling on SMH weakness — SMH dropping faster than XLK, a high-quality warning.
- Ratio -4.2% over 21d
- Quality score 56/100 (numerator-driven)
- Single-horizon
AI Participation falling on AIQ weakness — AIQ dropping faster than XLK, a high-quality warning.
- Ratio -3.7% over 21d
- Quality score 55/100 (numerator-driven)
- Single-horizon
Extended-Market Breadth rising mainly because SPY fell sharply — a mechanically misleading improvement.
- Ratio +0.5% over 21d
- Quality score 19/100 (Denominator collapse)
- Denominator-driven (81% of the move)
Nasdaq Ex-Top-30 Breadth falling on QNXT weakness — QNXT dropping faster than QTOP, a high-quality warning.
- Ratio -0.4% over 21d
- Quality score 43/100 (numerator-driven)
- Single-horizon
Every ratio — decomposed (21-day)
| Ratio | State | Quality | Driver | Num | Den | Ratio | TF |
|---|---|---|---|---|---|---|---|
| Credit Breadth HYG/LQD | ▲ Denominator collapse | 1 | denominator | 0% | -1.1% | +1.1% | mixed |
| Nasdaq-100 Equal-Weight Breadth QQQE/QQQ | ▲ Defensive improvement | 39 | denominator | -3% | -4.6% | +1.8% | aligned |
| Nasdaq Ex-Top-30 Breadth QNXT/QTOP | ▼ Strong deterioration | 43 | numerator | -4.6% | -4.3% | -0.4% | mixed |
| Ex-Mag-7 Breadth XMAG/SPY | ▼ Flat | 44 | numerator | -0.9% | -0.7% | -0.3% | mixed |
| Small-Cap Breadth IWM/SPY | ▲ Absolute leadership | 49 | denominator | +0.7% | -0.7% | +1.4% | aligned |
| S&P 500 Equal-Weight Breadth RSP/SPY | ▲ Absolute leadership | 58 | numerator | +1% | -0.7% | +1.7% | aligned |
| High-Beta Breadth SPHB/SPLV | ▼ Absolute weakness | 63 | numerator | -7.1% | +3% | -9.8% | mixed |
| Cyclical Breadth XLI/XLU | ▼ Numerator lag | 0 | denominator | 0% | +0.9% | -0.9% | mixed |
| Nasdaq Ex-Tech Breadth QQXT/QQQ | ▲ Absolute leadership | 8 | denominator | +0.5% | -4.6% | +5.3% | mixed |
| Mid-Cap Breadth MDY/SPY | ▲ Flat | 40 | denominator | -0.6% | -0.7% | +0.1% | mixed |
| Ex-Tech S&P Breadth SPXT/SPY | ▲ Absolute leadership | 45 | numerator | +0.8% | -0.7% | +1.5% | mixed |
| Semiconductor Leadership SMH/XLK | ▼ Strong deterioration | 56 | numerator | -9.7% | -5.7% | -4.2% | mixed |
| Consumer Risk Breadth XLY/XLP | ▼ Absolute weakness | 91 | numerator | -2.4% | +0.2% | -2.6% | aligned |
| Software Participation IGV/XLK | ▲ Absolute leadership | 18 | denominator | +1.6% | -5.7% | +7.7% | mixed |
| Extended-Market Breadth VXF/SPY | ▲ Denominator collapse | 19 | denominator | -0.2% | -0.7% | +0.5% | aligned |
| Small Growth Breadth IWO/IWN | ▼ Absolute weakness | 27 | denominator | -1.2% | +2.8% | -4% | mixed |
| AI Participation AIQ/XLK | ▼ Strong deterioration | 55 | numerator | -9.2% | -5.7% | -3.7% | mixed |
| Large Growth vs Value IWF/IWD | ▼ Absolute weakness | 61 | numerator | -3.2% | +2.1% | -5.2% | aligned |
| Micro-Cap Breadth IWC/IWM | ▲ Strong leadership | 65 | numerator | +1.9% | +0.7% | +1.2% | mixed |
| Nasdaq Tech vs Ex-Tech QTEC/QQXT | ▼ Absolute weakness | 72 | numerator | -7.4% | +0.5% | -7.8% | mixed |
| Financial Risk Breadth KBE/XLU | ▲ Strong leadership | 77 | numerator | +6.2% | +0.9% | +5.3% | mixed |
| Internet Participation FDN/XLK | ▲ Denominator collapse | 4 | denominator | -0.3% | -5.7% | +5.7% | mixed |
How to read it
Using log returns, ratio return = numerator return − denominator return, so each leg's contribution is exact. The quality score is the numerator's share of the move scaled by how consistently the ratio points the same way across 1, 21 and 63 days — high when the asset we track is genuinely the story, low when the move is a denominator artifact. Misleading strength = a ratio rising on a denominator collapse; real weakness = a ratio falling because the numerator itself is deteriorating, confirmed across horizons.
For information and discussion only — a reading of market internals, not investment advice. Thresholds are uncalibrated pending the planned backtest. Pairs with Breadth-of-Breadth and the Beta-Instability X-Ray.