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Since the denominator of this ratio is the sum of both advancing stocks and declining stocks, the ratio cannot be greater than 1 or less than 0. The breadth thrust indicator, therefore, is a percentage value that moves like a traditional oscillator from 1 to 100 (or .01 to 1.00).

In technical analysis, Breadth Thrust can be read like a stochastic or RSI where overbought and oversold levels are at the extreme values. A divergence from the underlying price chart points to a weakening of momentum. The number of days to use for the moving averages should be determined by the time-period being evaluated.

According to Dr. Zweig, a "Breadth Thrust" occurs when, during a 10-day period, the Breadth Thrust indicator rises from below 40% to above 61.5%. A "Breadth Thrust" indicates that the stock market has rapidly changed from an oversold condition to one of strength, but has not yet become overbought. Dr. Zweig also points out that most bull markets begin with a Breadth Thrust.

Chart 1: S&P 500 - Breadth Trust

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