Market Breadth: Beyond the Price Hype
A Guide for Savvy Traders: Learn About One of Today's Most Discussed Topics in Trading
Market breadth refers to the overall health of a market by analyzing how many stocks are participating in a price movement. It's not just about the index itself going up or down, but how many individual stocks are contributing to that move.
Market breadth is a broad concept that deserves a series of publications, similar to the one concluded last week related to price action (4 publications) or other topics that have been studied in more than one publication as Oscillators and Support / Resistance Levels.
About the market and risk management:
Before diving in, remember: the market is overbought, a healthy pullback is needed to reset oscillators and the current price action is looking similar to Summer 2023, when the crowd thinking was “Overbought can stay overbought”. A pullback by mid July 2024 is very likely.
As studied last Saturday, price action is showing exhaustion for most of the securities analyzed: GOOG continues validating the annual S/R Level, AAPL is trying to print a weekly shooting star, Bitcoin is falling as studied, on the edge of the 20 Weekly Average, Dow Jones found resistance at the 20 Daily moving average, same IWM, which has to jump above that line to validate a bullish inverted weekly hammer setup.
NVDA continues soaring, that’s a must watch since NDX and SPX are still holding levels thanks to the influence (not only) of the new biggest company in the world based on market cap.
Last but don’t least, GDX is looking bouncy so far, trying to validate a weekly inverted hammer setup, and TSLA continues moving constructive, the bullish setup shared last Saturday continues working out, mostly the one zoomed in over the weekly chart.
Manage your risk setting Stop loss orders, for longs and shorts, no matter your positioning, protection is key and the S/R levels can help as a reference combined with your own and personal risk tolerance.
Three ways to measure market breadth for trading will be covered today, including the definition, how to interpret them, trading strategies and updated charts with the current market context.