3/18/2011

What creates breadth trends


Underlying buying and selling creates breadth trend.
Near a bottom most stocks are in negative territory and when buying comes in number of b/o expands. In short period of time the breadth number climb rapidly that gives a breadth thrust.
Near top there can be two possible scenarios:
1 extreme positive breadth as every stock is bought. This happens in blowout moves
2 divergence in breadth. Market continues to go higher but breadth deteriorates creating divergence between market trend and breadth trend. (This is what happened recently). Narrower and narrower group of stocks lead the move higher.

2 comments:

Vladimir Zykov said...

Is this what is happening yesterday and today?

Pradeep Bonde said...

Too early to tell.