A breadth indicator is a financial market indicator that measures the extent of participation or strength in a particular market move. It provides insights into the number of individual assets or components contributing to the overall trend in a market index or sector. Breadth indicators are often used in technical analysis to assess the underlying health or breadth of a market rally or decline.

There are various breadth indicators, and each may focus on different aspects of market participation. Here are a few common types:

1. **Advance-Decline Line (AD Line):**
– The Advance-Decline Line is a breadth indicator that measures the number of advancing stocks minus the number of declining stocks. It is cumulative, meaning it adds the daily advances and subtracts the daily declines. A rising AD Line suggests broad market strength, while a declining AD Line may indicate weakening market breadth.

2. **Advance-Decline Ratio:**
– The Advance-Decline Ratio compares the number of advancing stocks to the number of declining stocks on a given day. A ratio greater than 1 indicates more stocks are advancing, while a ratio less than 1 suggests more stocks are declining.

3. **Up Volume-Down Volume:**
– This indicator focuses on the volume associated with advancing and declining stocks. It compares the total volume in advancing stocks to the total volume in declining stocks. A higher up volume suggests stronger buying interest.

4. **New Highs-New Lows:**
– New Highs-New Lows measures the number of stocks reaching new highs versus those hitting new lows over a specific period. A high number of new highs relative to new lows indicates positive market breadth, while the opposite suggests negative breadth.

5. **McClellan Oscillator:**
– The McClellan Oscillator is calculated by taking the difference between a short-term exponential moving average (EMA) and a long-term EMA of the Advance-Decline Line. It helps identify overbought or oversold conditions in the market.

6. **Breadth Thrust:**
– Breadth Thrust occurs when a predefined percentage of stocks in a market index move from being below their 10-day moving average to above it within a short period. This can signal the start of a significant market advance.

Breadth indicators are valuable for confirming the strength or weakness of a market trend. While a price index may show a new high, breadth indicators help determine the degree of participation in that high. If only a small number of stocks are driving the index higher, it may indicate a lack of broad market support, potentially making the trend less sustainable.

Traders and investors use breadth indicators alongside other technical and fundamental analyses to make more informed decisions about market conditions and potential trends. These indicators are particularly useful for identifying potential trend reversals and assessing the overall health of a market move.