what does a breadth indicator tell you 
breadth indicators provide traders and investors with a view of an overall market the stock market is typically examined using stock indexes for example the s p 500 index s advance decline line is a cumulative guide for whether more stocks are rising or falling over time this calculation shows the overall investor sentiment in all the stocks within the index breadth indicators are primarily used for two purposes there are many different breadth indicators that traders and investors can use in their analysis some other popular breadth indicators aside from the advance decline line include there are many other breadth indicators traders and investors may use different breadth indicators for different purposes for example on balance volume looks at buying and selling pressure from a volume standpoint rather than just looking purely at price while the mcclellan summation index involves a more complex formula that generates actual buy and sell signals some breadth indicators such as the chaikin oscillator and on balance volume can be applied to individual stocks or even other assets other breadth indicators such as the advance decline line or arms index are only calculated based on indexes traders use market breadth indicators in conjunction with other forms of technical analysis such as chart patterns and technical indicators to maximize the odds of success for example if the advance decline line starts to drop while the s p 500 is still rising traders will watch closely for the s p 500 to break below a rising trendline break below support or for technical indicators to turn bearish this will help confirm that the price may be starting to decline and therefore the trader can exit longs or initiate short positions breadth indicator examplethe following chart shows two breadth indicators on balance volume and the force index on a chart of the spdr s p 500 etf spy the force index at the bottom shows a strong bearish sentiment in early february during the market drop and relatively weak bullish sentiment throughout the entire period on balance volume shows bullish volume during the february and march recovery and moderate volume in the months following these indicators suggest that the market is relatively neutral between april and june the difference between breadth indicators and technical indicatorsbreadth indicators are a subset within the larger field of technical indicators while breadth indicators attempt to gauge participation and strength in a stock or index s movements technical indicators have a far larger purpose technical indicators can be used to analyze volume or price generate trade signals or define support and resistance limitation of using breadth indicatorsbreadth indicators won t always forewarn of a reversal nor will they always confirm a price move even though the price keeps moving in the same direction most breadth indicators are prone to some situational anomalies while traders typically look for volume to increase as prices move further this doesn t always happen trends can last a very long time on decreasing volume or even decreasing stock participation which will lead to the breadth indicators diverging but not necessarily resulting in a price reversal certain breadth indicators may also generate odd readings because of their calculation method on balance volume may jump or decline significantly for example if there is a huge volume day but the price finishes only marginally higher or lower the price barely moved but the indicator could move a great deal 