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Paul Tracy

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Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

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Updated November 11, 2020

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.

Why Does the Breadth of Market Theory Matter?

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

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