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Breadth Oscillator Differential Signals (Preview)

By Lawrence G. McMillan

Many of our subscribers are familiar with the breadth oscillator differential buy signals that occur in deeply oversold markets – when the “stocks only” breadth oscillator falls far faster than the NYSE-based one.  But recently, in the wake of the market strength since the election, the “stocks only” breadth oscillator has risen far faster than the NYSE-based oscillator.  This is unusual.  What does it mean for the markets when this happens?  First, let’s offer a quick review of what the breadth oscillators are, and how we calculate them.

Breadth Oscillator Definitions, etc.

Breadth is a generic market statistic.  It is simply the number of advancing issues minus the number of declining issues.  One can use different subsets of data to determine those advancing and declining issues.  For example, one might use the NYSE breadth data that is the most popular – published in many places daily.  But one could determine S&P 500 breadth (using only those 500 stocks) or perhaps NASDAQ breadth (using only NASDAQ) stocks. 

The breadth oscillator is a fairly simple calculation...

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