Market breadth

Market breadth indices show the ratio between the number of stocks that most recently gave a buy signal compared to the total number of stocks. The indices can have values between 0 and 100, where 0 means that all stocks most recently gave a sell signal, and 100 means that all stocks most recently gave a buy signal. High values (90 or more) are seen as a warning sign that the market is overheated, and that a significant reaction or reversal may come soon. Similarly, low values (below 10) are seen as a sign that a strong pressure to sell soon will be over, and that prices will start rising again.

Three different market breadth indices are computed, one for each of Investtech's three trading strategies Short Term Trading Range, Long Term Trading Range and Moving Average. The two Trading Range strategies give a buy signal when the price of a stock moves above an earlier top. The Moving Average strategy gives a buy signal when the short term moving average moves above the long term moving average.


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