Breadth measures the buying and selling interest in the stock market. Breadth tells us the underlying strength of the market. The tool to use to measure breadth is the McCellan Summation Index of the Dominant Market. This is based upon running a cumulative total of advances and declines of the NYSE or the OTC markets using the differences between 5% and 10% trend. In addition, the slope of the Summation Index is IMPORTANT. If it is UP, it is positive (bullish) and if it slopes DOWN it is negative or (bearish). Numbers of over 1000 is considered bullish. Many use 1500 as a benchmark.
When the Summation level climbs above 1000, especially when it reaches above 2000, the NYSE will generally not correct more than 2%. When the Summation Index drops below 1,000 risks jumps substantially. SECONDLY, the investor needs to know which funds, sectors and stocks in the market are performing best. THIRDLY, the investor needs fundamental and technical information about these individual funds or stocks. We believe investors should have fund charts and a source of information that informs them about the best choices within the market. .
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