A breadth indicator tracking the percentage of stocks trading above their 5-day moving average across major indices, revealing market sentiment and potential overbought or oversold conditions.
Explore complementary indicator rolesHow it works
The indicator calculates the percentage of stocks within major indices (S&P 500, Nasdaq, Russell 2000, Dow Jones) trading above their 5-day moving average. It plots these percentages as a dynamic line that fluctuates based on market breadth, with two key threshold lines at 85% and 15%.
When the percentage crosses above 85%, it suggests potential overbought conditions, while crossing below 15% indicates potential oversold conditions. Small circles are plotted at these threshold crossings, providing visual markers for traders to identify significant market sentiment shifts.
Why it may be useful
This breadth indicator offers a comprehensive view of market participation and underlying strength across multiple indices. By revealing how many stocks are trading above their short-term moving average, traders can gauge overall market momentum and potential trend reversals.
The indicator helps traders understand whether market movements are broad-based or driven by a few large stocks, providing insight into market health and potential future direction. The threshold lines serve as quick visual cues for identifying extreme market conditions that might signal potential trading opportunities.
When to explore it
The indicator is most effective during periods of market volatility and when seeking to understand broader market sentiment across different indices. Traders can use it to confirm trend strength, identify potential reversal points, and assess market breadth during key economic events or earnings seasons.
It is particularly useful for traders looking to make informed decisions about entry and exit points, as the percentage of stocks above their moving average can provide early signals of changing market dynamics. The indicator works well across various timeframes, making it valuable for scalpers, day traders, and swing traders alike.
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What we’ve verified
Access, alerts and repainting behaviour have not been independently verified for this indicator. Check the creator’s current publication and settings.
General descriptions and classifications are recovered research. Verified details above identify the specific checks we have completed. Check the creator’s current publication for later changes.
