What Is Market Breadth?
Market breadth measures the degree of participation in a market move. It answers: "Is the rally broad-based or driven by a few stocks?" This topic supports the Classical Techniques domain and appears in intermarket analysis on Level II.
For the full curriculum breakdown, visit the CMT exam guide 2026.
Key Breadth Indicators
Advance-Decline Line (AD Line)
The cumulative sum of (advancing issues − declining issues). When the AD Line diverges from the market index, it signals weakening breadth.
McClellan Oscillator
Based on the difference between 19-day and 39-day EMAs of net advances:
- Positive values: Bullish breadth
- Negative values: Bearish breadth
- Extreme readings (±100+): Overbought/oversold conditions
McClellan Summation Index
Cumulative sum of the McClellan Oscillator. Long-term breadth gauge:
- Above +1000: Strong bull market
- Below −1000: Strong bear market
Arms Index (TRIN)
TRIN = (Advancing Issues / Declining Issues) / (Advancing Volume / Declining Volume)
- Below 1.0: Bullish
- Above 1.0: Bearish
- Extreme readings: Contrarian reversal signals
New Highs / New Lows
The number of stocks making 52-week highs vs. lows. A healthy uptrend should show expanding new highs.
Breadth and Dow Theory
Market breadth directly relates to Dow Theory's concept of confirmation. When most stocks participate in a move, the trend is healthy. Narrowing breadth is an early warning of trend exhaustion.
Exam Application
| Indicator | Exam Focus | Level |
|---|---|---|
| AD Line | Divergence analysis | Level 1 |
| McClellan Oscillator | Calculation and signals | Level 1 & 2 |
| TRIN (Arms Index) | Interpretation | Level 1 |
| New Highs/Lows | Trend health assessment | Level 1 & 2 |
| Summation Index | Long-term analysis | Level 2 |
Continue your study with technical indicators and the complete CMT guide.
Advance-Decline Line vs. S&P 500
Divergence between AD Line and index warns of potential trend reversal