lot of news stories are hitting the wires given all the ups and downs in the market right now. And many of them are citing a term that is often misunderstood – “market breadth.”
Market breadth is a measure of how many companies in a particular index or market have gone up vs. how many have gone down. The majority rule, and breadth is then said to be either positive or negative.
For example, the S&P 500 contains 500 constituents. If 300 of those stocks closed in negative territory on a given day, that market had bad breadth. Conversely, if 400 of the stocks went up, market breadth would be considered very positive.
This measure is viewed as a window into investor sentiment. That’s because it’s a quick way of knowing just how widespread buying or selling was. It’s especially useful when you’re looking at a market-weighted index.
Reason: By design, they attribute higher importance to larger stocks. Thus, losses in larger shares can weigh the entire “market” down, even if the majority of stocks rose! Learn more about Market Breadth and how it can affect your
dividend investing.
To your dividend investing success,
InvestingInDividends.com
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