The indicator moves between 0% and 100%. A cross above 50% shows that most stocks in the index are now in short-term uptrends, and a cross below 50% shows that most are in downtrends. The 20-day version moves quickly and swings between extremes, which makes it a timing tool for short-term overbought and oversold conditions rather than a trend gauge. Divergences are worth watching as well: when an index makes a new high but fewer stocks trade above their 20-day moving average, the rally is narrowing.
The charts above show the % of stocks above the 20-day moving average under the price of 24 stock indexes, from the S&P 500, Nasdaq 100 and Russell 2000 to the FTSE 100, DAX and Nifty 50, so you can compare breadth across markets at a glance. Click a chart to open a larger version.
Related stock screens: New 4-Week High Stocks, New 4-Week Low Stocks and Price Crossed Above MA(13) Stocks. You can also use market breadth as a filter in your own screens and strategies in the Formula Screener and the Strategy Backtester.
It is a market breadth indicator that shows the share of stocks in an index trading above their own 20-day simple moving average. It measures how broad the short-term trend is.
For each stock in the index, the close is compared with its 20-day moving average. The number of stocks above the average is divided by the number of stocks in the index and multiplied by 100.
Readings above 50% mean most stocks are in short-term uptrends. Readings above 70% to 80% show broad strength but can also mean the market is overbought, while readings below 20% to 30% point to an oversold market.
Yes, for short-term trades. Because it swings quickly between extremes, a turn up from below 20% often marks a short-term low, and a turn down from above 80% a short-term high. Confirm it with the longer-term versions.
Yes. In the Formula Screener, a20ma is this indicator. For example, (a20ma < 20)@sp500 and rsi(14) ca 30 finds stocks whose RSI crossed above 30 while fewer than 20% of S&P 500 stocks are above their 20-day SMA. The same condition works as a market filter in the Strategy Backtester.
