Breadth of Market Theory
What is the Breadth of Market Theory?
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 Does the Breadth of Market Theory Work?
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.