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 2026-09-16
Alerts — misleading strength & real weakness
Nasdaq Ex-Top-30 Breadth falling on QNXT weakness — QNXT dropping faster than QTOP, a high-quality warning.
- Ratio -4.5% over 21d
- Quality score 65/100 (numerator-driven)
- Single-horizon
Small-Cap Breadth falling on IWM weakness — IWM dropping faster than SPY, a high-quality warning.
- Ratio -4.1% over 21d
- Quality score 73/100 (numerator-driven)
- Confirmed across 1d/21d/63d
Semiconductor Leadership falling on SMH weakness — SMH dropping faster than XLK, a high-quality warning.
- Ratio -5% over 21d
- Quality score 63/100 (numerator-driven)
- Single-horizon
Mid-Cap Breadth falling on MDY weakness — MDY dropping faster than SPY, a high-quality warning.
- Ratio -4.6% over 21d
- Quality score 75/100 (numerator-driven)
- Confirmed across 1d/21d/63d
Every ratio — decomposed (21-day)
| Ratio | State | Quality | Driver | Num | Den | Ratio | TF |
|---|---|---|---|---|---|---|---|
| Credit Breadth HYG/LQD | ▼ Flat | 49 | numerator | -1% | -0.8% | -0.2% | mixed |
| Nasdaq-100 Equal-Weight Breadth QQQE/QQQ | ▼ Strong deterioration | 56 | numerator | -5.9% | -3.4% | -2.6% | mixed |
| High-Beta Breadth SPHB/SPLV | ▼ Strong deterioration | 56 | numerator | -6.2% | -3.5% | -2.7% | mixed |
| S&P 500 Equal-Weight Breadth RSP/SPY | ▼ Strong deterioration | 62 | numerator | -3.9% | -2.4% | -1.5% | aligned |
| Nasdaq Ex-Top-30 Breadth QNXT/QTOP | ▼ Strong deterioration | 65 | numerator | -6.9% | -2.6% | -4.5% | mixed |
| Ex-Mag-7 Breadth XMAG/SPY | ▼ Strong deterioration | 65 | numerator | -4.4% | -2.4% | -2% | aligned |
| Small-Cap Breadth IWM/SPY | ▼ Strong deterioration | 73 | numerator | -6.4% | -2.4% | -4.1% | aligned |
| Ex-Tech S&P Breadth SPXT/SPY | ▲ Flat | 38 | denominator | -2.3% | -2.4% | +0.1% | mixed |
| Cyclical Breadth XLI/XLU | ▼ Strong deterioration | 53 | numerator | -9.5% | -6.5% | -3.2% | mixed |
| Nasdaq Ex-Tech Breadth QQXT/QQQ | ▼ Strong deterioration | 54 | numerator | -5.3% | -3.4% | -1.9% | mixed |
| Semiconductor Leadership SMH/XLK | ▼ Strong deterioration | 63 | numerator | -8.2% | -3.4% | -5% | mixed |
| Mid-Cap Breadth MDY/SPY | ▼ Strong deterioration | 75 | numerator | -6.9% | -2.4% | -4.6% | aligned |
| Consumer Risk Breadth XLY/XLP | ▼ Strong deterioration | 78 | numerator | -5.6% | -1.6% | -4.1% | aligned |
| AI Participation AIQ/XLK | ▲ Defensive improvement | 26 | denominator | -1.5% | -3.4% | +1.9% | mixed |
| Software Participation IGV/XLK | ▲ Absolute leadership | 40 | denominator | +2.9% | -3.4% | +6.5% | mixed |
| Financial Risk Breadth KBE/XLU | ▲ Defensive improvement | 43 | denominator | -6% | -6.5% | +0.5% | mixed |
| Micro-Cap Breadth IWC/IWM | ▲ Defensive improvement | 47 | denominator | -5.7% | -6.4% | +0.7% | aligned |
| Nasdaq Tech vs Ex-Tech QTEC/QQXT | ▼ Strong deterioration | 50 | numerator | -6.8% | -5.3% | -1.6% | mixed |
| Small Growth Breadth IWO/IWN | ▼ Strong deterioration | 59 | numerator | -8.4% | -4.3% | -4.3% | mixed |
| Large Growth vs Value IWF/IWD | ▼ Strong deterioration | 59 | numerator | -3.5% | -1.8% | -1.8% | mixed |
| Extended-Market Breadth VXF/SPY | ▼ Strong deterioration | 64 | numerator | -6.2% | -2.4% | -3.9% | mixed |
| Internet Participation FDN/XLK | ▲ Absolute leadership | 13 | denominator | +0.6% | -3.4% | +4.1% | 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.
FAQ · from the current data · as of 2026-09-16
Quick answers
What does Ratio-Quality Decomposition measure?
A rising ratio is ambiguous — it can mean the numerator led (real) or the denominator collapsed (misleading). 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 scores high; denominator-driven or single-horizon scores low.
What is the average ratio quality right now?
As of 2026-09-16, the average quality score across tracked ratios is 54 out of 100, with 72.7% of ratios numerator-driven.
How many ratios are showing misleading strength or real weakness?
As of 2026-09-16, 0 ratios are rising on low quality (misleading strength) and 15 are falling on genuine numerator weakness (real weakness).
How is the quality score calculated?
Using log returns, ratio return equals numerator return minus 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 tracked asset is genuinely the story, low when the move is a denominator artifact.