What Is Market Breadth? What It Showed Before 6 Falls

On 6 October 2026, SPY (the S&P 500 ETF) closed at its highest level of the period we study. That day, 9 of the 10 stocks we track closed above their 200-day average, the mean of their last 200 closing prices. By 26 October, 7 did.

This post builds two breadth measures from our own price data, then checks what they showed before six falls of 10% or more in SPY. In our test, breadth weakened early before only two of them.

The S&P 500 is weighted by market value, so larger companies count for more. Our guide to equal weight against market-cap weight covers the weighting.

The first measure is the share of stocks above their 200-day average. The 200-day average is the mean of a stock's latest 200 closing prices. Our guides to moving averages and the 200-day moving average cover the average itself.

The second measure is the advance/decline line. Each day, we subtract the number of stocks that fell from the number that rose, then add the result to a running total.

Our gauge covers only the single stocks in our price data: Advanced Micro Devices (AMD), Amazon, Alphabet, Intel, Meta, Microsoft, Netflix, Nvidia, Palantir and Taiwan Semiconductor Manufacturing (TSMC). These are large technology and growth stocks, so the results describe this group, not the market.

A 200-day average needs 200 prices. Palantir's first price in our data is 30 September 2020, so the ten-stock series starts on 16 July 2021 and runs to 26 October 2026, which is 1,326 trading days.

Without Palantir, nine stocks give a longer series from 7 March 2013, which is 3,431 trading days. We use the ten for the recent picture and the nine for the test of falls. Prices are adjusted for splits and dividends, so all moves include dividends.

Chart 1 shows how many of the ten stocks closed above their own 200-day average each day.

The count was 8 or more on 706 of the 1,326 days. It was zero on 149 days, all between 23 February 2022 and 9 November 2022.

On 26 October the count was 7, while SPY closed 1.76% below its high.

Chart 2 plots the advance/decline line for the ten stocks. A stock that closed unchanged counts as neither an advancer nor a decliner. That applied to 33 of the 13,250 daily price changes (10 stocks over 1,325 days).

The line's low was 162 below zero, on 28 December 2022. It peaked at 407 on 6 May 2026. On 6 October 2026, when the index set its high, the line stood at 383. That is 24 below its peak, a gap of 5.9%. It ended at 359.

We define a fall as SPY closing at least 10% below its previous highest close. The nine-stock series holds six such falls.

For each fall, we found the first day on which half or fewer of the nine stocks were above their 200-day average. Chart 3 shows how far SPY had already dropped by that day, next to the full fall.

Breadth reached half or fewer before SPY was 5% down in two of the six falls, those starting in September 2018 and February 2025. In three falls, SPY had already dropped 8.3% or more by then. In the January 2018 fall, breadth never got that low (the lowest count was 8 of 9).

The February 2020 fall shows the lag most clearly. On 25 February 2020, when SPY was 5% down, all nine stocks were still above their 200-day average. Breadth reached half or fewer on 12 March, with SPY 26.7% below its high.

A warning needs a strong reading first. Breadth rises to 80% or more of the stocks above their 200-day average. The warning fires when it then drops to 50% or fewer. It cannot fire again until breadth returns to 80%.

For each warning, we measured SPY's worst fall over the next 63 trading days: the lowest close in that window against the close on the warning day.

The nine-stock series produced 12 warnings. Chart 4 dates each one by its warning day. The October 2018 warning falls inside the fall that chart 3 dates from September 2018.

A fall of 5% or more followed 4 of the 12 warnings: June 2015, October 2018, March 2020 and February 2025. Four saw no fall at all. The other four fell 2.24% to 4.96% at worst.

Across the 3,368 days with 63 trading days ahead, the median worst fall was 2.5%. A fall of 5% or more followed on 27.5% of those days. The warnings reached 4 of 12, which is 33.3%.

A count that falls while the index holds near a high describes a narrower rally. A fall from 9 to 7 still leaves 7 of the 10 stocks above their average.

We did not test a gauge built on hundreds of stocks.

The universe changes the answer. Breadth reached half or fewer on 6 January 2022 in the ten stocks and on 21 January 2022 in the nine.

The test holds six falls and 12 warnings. One more or one fewer warning moves the share by 8.3 points.

The ten-stock series fired six warnings. Two of them, on 20 December 2021 and 6 January 2022, have overlapping 63-day windows, so they count nearly the same fall twice.

We chose the 80% and 50% levels after looking at the data. We then tried nine pairs of levels, arming at 70%, 80% or 90% and firing at 40%, 50% or 60%. In the ten stocks, 20% to 67% of warnings were followed by a fall of 5% or more. In the nine, the range was 25% to 80%.

The warnings beat the share of all days in 6 of 9 pairs for the ten stocks and 8 of 9 for the nine.

The margin is small at our chosen levels: in the nine, 4 falls followed the 12 warnings, against 3.3 expected at the all-day rate. The largest margins come from pairs with only 5 or 6 warnings. The result depends on levels we chose after seeing the data.

Breadth fell to half or fewer before SPY was 5% down in 2 of 6 falls.

Warnings beat the all-day rate in most level pairs, but the margin is small and rests on 12 cases. Breadth describes how many stocks join a move, but it did not time these falls reliably.

The Academy is free to read, here on the web. The Long Trend, our free weekly letter, comes by email.

This explainer is part of the YX Insights Academy. Each one takes a single idea and checks it against real data.

The same approach runs through everything else we publish:

Good places to start on the website:

Market breadth shows how many stocks take part in an index's move. Broad breadth means most stocks rise with the index, while narrow breadth means a few stocks do the lifting. Two common measures are the share of stocks above their 200-day average and the advance/decline line, a running total of stocks that rose minus stocks that fell.

Narrow breadth means a small number of stocks account for an index's gains while most others lag. The share of stocks above their 200-day average falls while the index holds near a high. On 26 October 2026, 7 of our ten stocks were above their average, down from 9 on the day of SPY's high.

Subtract the number of stocks that fell from the number that rose each day, then add the result to a running total. An unchanged stock counts as neither. In our ten stocks, the line peaked at 407 on 6 May 2026 and ended at 359 on 26 October 2026.

No, not reliably, in our test. Across 12 warnings in nine stocks since 2013, 4 were followed by a fall of 5% or more in SPY within 63 trading days, against 27.5% of all days. Breadth reached half or fewer before SPY was 5% down in 2 of 6 falls.

DISCLAIMER: This article is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.