Market Breadth: Why Counting Stocks Above MA Beats Watching Indices

This article uses the platform's 4-section teaching structure: Concept / How We Compute It / How to Read / Caveats.

1. Concept

Market-cap-weighted indices are dominated by mega-caps. When an index rises 1%, it may be a single name carrying the load while 1,800 other stocks do nothing. Market breadth solves this by directly counting how many stocks are participating in the trend.

The most common breadth metric is "% above MA20 / MA60 / MA120 / MA240":

The percentage of stocks whose closing price is above their N-day moving average.

High % → most stocks above trend → broad bullish participation
Low % → most stocks below trend → broad bearish state
Index new high + breadth declining → mega-cap concentration, warning signal

This is a daily must-watch for institutional traders but rarely shown on retail platforms.

2. How We Compute It

Data Source

All TW listed stocks' daily close (sp_tw_h) × basic_info.index (TWSE / TPEX / Emerging).

Flow (computed daily after close at 21:30 TPE)

Split by market (TWSE / TPEX / Emerging / All-Market)
For each stock, compute N-day SMA (N = 20 / 60 / 120 / 240)
Compare today's close vs MA: close > MA → "above"
Sample bias protection: stocks with fewer than N days of history are excluded from the denominator
Persist to market_breadth_d_tw (one row = one market × one day)

Percentile Rank

Each card's P{n} badge shows the indicator's percentile over the past 252 trading days:

P80 = higher than 80% of historical days
P20 = lower than 80% of historical days

This turns raw numbers like "65%" into context: "is this relatively high or low?"

Update Cadence

Cron: daily 21:30 TPE
Admin backfill: python Crawlers/calc_market_breadth_tw.py --backfill 252

3. How to Read

Absolute Levels

% above MA60	State	Action
> 80%	🔴 Overheated	Bullish extreme, short-term caution
60–80%	🟠 Strong	Uptrend in progress
40–60%	⚪ Neutral	Range-bound
20–40%	🟢 Weak	Downtrend in progress
< 20%	🟢 Oversold	Bearish extreme, contrarian buy zone

Advanced: Divergence Reading

This is where breadth earns its keep:

Healthy bull: index up + breadth up in sync
Mega-cap concentration: index up + breadth down → few names leading, many already weak → top warning
Structural bottom: index down + breadth up → leaders rebounding ahead of majority → base forming

MA Period Semantics

MA20: short-term momentum (3–4 weeks). For swing traders.
MA60: intermediate trend (~1 quarter). Most institutionally watched.
MA120 / MA240: long-term trend. Reflects structural bull/bear regimes.

Best read as a 3-line panel (short/mid/long):

All three high → broad healthy bull
Short high but long low → rally within a weak regime
Short low but long high → healthy pullback; long-term trend intact

4. Caveats

⚠️ Sample Bias

Newly listed stocks (< N days of history) are excluded from the MA denominator. The UI explicitly shows Sample 1850 / 1920 on hover. Don't read small-sample days as stable signals.

⚠️ TW vs US

Currently only TW breadth is available (paired with ^TWII)
US breadth (paired with ^GSPC) is planned for a later release
Trading calendars differ (Chinese New Year, typhoon days etc.); time-series cannot be directly cross-compared

⚠️ Not a Buy/Sell Signal

Breadth is a state description, not a trading directive. High breadth can persist; low breadth can keep falling. Combine with:

Monthly revenue momentum (coming in Phase 4)
Institutional flows
Macro indicators

⚠️ Difference from Fear & Greed

Market breadth is only one of the sub-indicators in Fear & Greed composites. We will add more sentiment indicators (volatility, new highs/lows, margin) over time but will not publish a single composite score — that forces our subjective weights onto users. You compose your own view.

Try It

Open Home → Taiwan → Rankings — breadth cards sit at the top
Hover the main number to see sample size
Click the 📐 icon to view the full formula and site parameters