Since SPX is a cap-weighted index, would it be even more telling if the breadth indicators incorporated size? For example, would the 52-week hi-low index be a more accurate indicator if each underlying stock was weighted by market cap? Not sure if this would make much of difference but just a thought I had and wanted to hear your views.
I think it’s important to take mkt cap out of the equation. Simple count of # of stocks satisfying a criteria is the best way to view breadth in my opinion.
Moving average breadth, A/D Line, Hi-Lo etc. All very simple calculations that give us an understanding of the true participation of the underlying stocks in an index or listed on an exchange.
Shane -
Since SPX is a cap-weighted index, would it be even more telling if the breadth indicators incorporated size? For example, would the 52-week hi-low index be a more accurate indicator if each underlying stock was weighted by market cap? Not sure if this would make much of difference but just a thought I had and wanted to hear your views.
I think it’s important to take mkt cap out of the equation. Simple count of # of stocks satisfying a criteria is the best way to view breadth in my opinion.
Moving average breadth, A/D Line, Hi-Lo etc. All very simple calculations that give us an understanding of the true participation of the underlying stocks in an index or listed on an exchange.
Great read