Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Breadth of Market Theory

What it is:

Breadth of market theory refers to a concept that the number of securities rising or falling in a market can predict the future strength of that market.

How it works (Example):

The breadth of market theory is employed in technical analysis to predict market strength.

For instance, if a market is comprised of 100 stocks and 70 stocks make price gains while 30 stocks either experience no change or decline in price, breadth of market theory would suggest that this market is strong.

Why it Matters:

Breadth of market theory can ai technical analysts in forecasting whether a market will rise or fall in value.