🌟 Capital Market Chronicles – Episode 282: TECHNICAL ANALYSIS – MARKET INTERNALS (Part II)
“If everyone’s not dancing, the party won’t last.” 🎉📉
Breadth answers a simple but powerful question:
👉 How many stocks are actually participating in this move?
Because an index can rise…
while most stocks quietly decline.
📊 1. Advance–Decline Line (ADL)
Measures the difference between advancing and declining stocks.
If more stocks rise than fall → ADL rises.
If more fall than rise → ADL declines.
Why It Matters:
If the index is climbing but ADL is falling —
that’s divergence.
Translation:
“The generals are advancing. The soldiers are retreating.”
That rarely ends well.
📊 2. Advance–Decline Ratio (ADR)
A ratio of advancing stocks to declining stocks.
-
2:1 → strong participation
-
1:2 → weakness
It gives a proportional measure of internal strength.
🚀 3. Breadth Thrust
Occurs when participation surges suddenly.
This often signals:
-
Powerful rallies
-
Major trend shifts
It’s like the market saying:
“Fine. We’re all in.”
📈 4. High–Low Index (HLI)
Tracks new 52-week highs vs new lows.
When new highs dominate, strength is broad.
When new lows dominate, internal weakness spreads.
📊 5. New Highs–New Lows Ratio
Compares stocks hitting fresh highs versus fresh lows.
If markets are rising but new highs shrink —
momentum may be fading.
Breadth exposes sustainability.
Without participation, trends weaken.
Next: Volume, Open Interest, and TRIN — measuring participation intensity.
⚠️ Disclaimer: This Blog is for general guidance only and does not replace personalised financial advice.
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