Market Breadth Indicators Explained: Advance-Decline Line, McClellan Oscillator and New Highs vs New Lows

October 6, 2026

Market breadth measures how many stocks are taking part in a move. An index like the S&P 500 is weighted by market value, so a handful of giant companies can push it to a record while most of its members go nowhere or fall. Breadth indicators strip the weighting out. They count stocks: how many rose, how many fell, how many hit new highs, how many sit above a moving average. When the count agrees with the index, the trend has wide support. When the index climbs and the count shrinks, the rally is being carried by fewer and fewer names, and that tends to matter later.

This page covers the main breadth tools, the formulas behind them, and how traders read them. For sentiment gauges that work alongside breadth, see the guides to the CNN Fear & Greed Index and the VIX.

The raw inputs

Almost every breadth indicator is built from a few daily counts, usually for NYSE or Nasdaq listed issues:

Advances: issues that closed higher than the day before.
Declines: issues that closed lower.
Unchanged: issues that closed flat (often ignored).
New 52-week highs and lows: issues trading at their highest or lowest level of the past year.
Up volume and down volume: shares traded in advancing versus declining issues.

Net advances is simply advances minus declines. On a day when 2,100 NYSE issues rise and 900 fall, net advances is +1,200. Each stock counts once, so a $3 trillion company and a $300 million company have the same vote. That is the whole point.

The advance-decline line

The advance-decline (A-D) line is a running total of net advances. Today’s value is yesterday’s value plus today’s net advances:

A-D line = previous A-D line + (advances − declines)

The absolute number means nothing, since it depends on the start date. What matters is direction and whether it confirms the index. If the S&P 500 or NYSE Composite makes a new high and the A-D line makes one too, participation is broad. If the index makes a new high and the A-D line stalls below its prior peak, fewer stocks are rising with it. That gap is a bearish divergence.

The classic example is 2007. The A-D line peaked well before the major indexes did in October 2007, and the 2008 bear market followed. In the other direction, the A-D line turned up ahead of the index in mid-2009, as the recovery broadened.

Two quirks are worth knowing:

The NYSE A-D line counts more than common stocks. Preferred shares, closed-end bond funds and other interest-sensitive listings are included, so the line partly tracks bond prices. Many analysts use a common-stocks-only version to avoid this.
The Nasdaq A-D line drifts lower over long stretches, even in bull markets. Nasdaq has a steady flow of small, speculative listings that fail and get delisted, which drags the cumulative count down. Compare Nasdaq’s A-D line to its own recent history, never to its level ten years ago.

The McClellan Oscillator and Summation Index

Sherman and Marian McClellan built the oscillator to measure breadth momentum. It works like MACD applied to net advances: a fast moving average minus a slow one.

McClellan Oscillator = 19-day EMA of net advances − 39-day EMA of net advances

The “19-day” and “39-day” exponential moving averages use smoothing constants of 10% and 5%, because 2 ÷ (19 + 1) = 0.10 and 2 ÷ (39 + 1) = 0.05. Each day:

Fast EMA = prior EMA + 0.10 × (today’s net advances − prior EMA)
Slow EMA = prior EMA + 0.05 × (today’s net advances − prior EMA)

The raw version has a problem: the number of listed issues changes over time, so a reading of +100 in 1975 is not comparable with +100 today. The ratio-adjusted version fixes that by dividing net advances by total issues before smoothing:

Ratio-adjusted net advances = (advances − declines) ÷ (advances + declines) × 1,000

How it is read:

Above zero: breadth momentum is positive; advances are gaining ground.
Below zero: declines are in control.
Extremes: readings far beyond +100 or −100 (on the ratio-adjusted scale) often mark short-term overbought or oversold conditions. A jump from below −50 to above +50 is one common definition of a breadth thrust.
Divergences: an index making a lower low while the oscillator makes a higher low suggests selling pressure is fading.

The McClellan Summation Index is a running total of the oscillator (yesterday’s value plus today’s oscillator reading). It moves slowly and is used for the medium-term trend. Crosses of zero, or of +500 and −500 for fewer whipsaws, are the usual signals.

New highs vs new lows

This group asks a different question: how many stocks are at the extremes of their one-year range?

Net new highs = new 52-week highs − new 52-week lows. Positive and rising is healthy.
Record high percent = new highs ÷ (new highs + new lows) × 100.
High-low index = 10-day simple moving average of record high percent.

On the high-low index, readings above 50 mean new highs outnumber new lows. Readings above 70 usually come with strong uptrends; below 30, with strong downtrends. Because a stock needs a full year of history to set a 52-week extreme, these measures change slowly. That makes them better for confirming trends than for timing turns.

The warning sign here is an index at a record while the number of stocks setting new highs keeps falling, or while new lows start creeping up at the same time. That second pattern is the core of the Hindenburg Omen.

Percent of stocks above moving averages

This is the most intuitive breadth gauge: what share of an index’s members trade above their 50-day or 200-day moving average?

Measure	What it tracks	Typical reading
% above 50-day MA	Short to medium-term participation	Above 80% is stretched; below 20% is washed out
% above 200-day MA	Long-term trend participation	Above 50% means most members are in uptrends

The 200-day version is the one to watch for narrow markets. During 2024 and much of 2025, there were stretches where the S&P 500 set new highs while fewer than half its members traded above their 200-day averages. The index was strong; the typical stock was not.

Equal weight vs cap weight

A simple way to see breadth without any counting is to compare the S&P 500 with its equal-weighted version, where each of the roughly 500 members gets the same weight. The Invesco S&P 500 Equal Weight ETF (RSP) and a cap-weighted fund like SPY are the common pair.

Equal weight outperforming: gains are spread across the average stock. Leadership is broadening.
Cap weight outperforming: the largest companies are doing most of the work.

Concentration made this spread one of the most watched charts of the AI rally. From early 2024 through late 2025 the cap-weighted index kept pulling ahead, and by 2025 the so-called Magnificent Seven made up roughly 30% to 35% of the index’s value. Our financial markets glossary covers related terms like market cap weighting and concentration risk.

A narrow market is not automatically a doomed one. Mega-cap leadership can run for years when earnings support it. But narrow rallies are more fragile: if the few leaders stumble, little is underneath to hold the index up.

The Hindenburg Omen and breadth thrusts

Two signals combine several breadth inputs into one trigger.

The Hindenburg Omen, devised by Jim Miekka, looks for a market that is rising on the surface but split underneath. The common version requires, on the same day:

NYSE new 52-week highs and new 52-week lows are both at least 2.8% of issues traded.
The NYSE Composite is higher than it was 50 trading days earlier (the trend is up).
The McClellan Oscillator is negative.
New highs are not more than twice the number of new lows.

Many followers treat a single signal as noise and want a second one within 30 days before taking it seriously. Its record is poor as a standalone sell signal: most Omens are followed by nothing much. Its defenders point out that it has tended to flash before the big declines, so it works better as a prompt to check other evidence than as a trigger to sell.

The Zweig Breadth Thrust, from Martin Zweig, is the bullish counterpart. It takes a 10-day EMA of advances ÷ (advances + declines) and fires when that reading rises from below 40% to above 61.5% within 10 trading days. It is rare, which is the appeal: it marks moments when buying swings from almost nobody to almost everybody in two weeks, typically after a sharp selloff.

How to read divergences, and where breadth fails

The practical routine is simple. When an index makes a new high, check whether the A-D line, net new highs and the percentage of stocks above their 200-day averages also make new highs. Confirmation across all three is the healthy case. If two or three lag, the rally is narrowing. Bullish divergences work the same way at lows: index makes a lower low, breadth measures do not.

The limits are real:

Timing is loose. Bearish divergences can last many months before a top, and sometimes they resolve with breadth catching up instead of price falling. The 2023 to 2025 run is a recent case of a narrow market that kept going.
Counting ignores size. A day when 70% of NYSE issues fall can still be an up day for the S&P 500 if the largest names rise.
The universe matters. NYSE, Nasdaq and S&P 500 breadth can tell different stories on the same day. Pick one and compare it to its own history.
Noise in the inputs. Interest-sensitive listings, ETFs and thinly traded issues all affect raw counts.

Breadth works best as a check on what the index is telling you, read alongside volatility and credit. When breadth weakens at the same time credit spreads widen and the VIX starts to climb, the signals reinforce each other. If you trade the index through leveraged products, narrow and choppy markets are exactly where leveraged ETFs lose ground to volatility decay. And when breadth collapses outright, as it did in March 2020, the market’s emergency brakes come into play; see how stock market circuit breakers work.