What does Breadth mean?

Breadth is a technical term used in trading rooms, demonstrating how broadly a market is moving. For example, when three-quarters of the New York Stock Exchange stocks grow in any given day one might say that the stock market has had a good breadth. One way to monitor the stock market breadth is to measure the number of stocks that advanced on the given day against the ones that have declined.

Breadth is the technical analysis which attempts to weigh the direction of the entire market by studying the number of firms advancing relative to the number declining.

When the breadth of the market is positive, that means that more companies are on the rise than are declining.

On the other hand, a disproportional number of securities that are on the decline are used to confirm what is called a bearish momentum. An indication of bullish market sentiment can be that there are many advancing issues, which are used to confirm a wide market uptrend. Traders typically look for companies that have previously created a fifty two week high, relating their number to the number of firms that have created a fifty two week low, since the data can be used to gather further information about which trend will continue, the bullish or the bearish one.