Chartered Market Technician Practice Exam 2025 – Complete Prep Guide

A breadth indicator is a tool used in technical analysis to measure the participation of different securities in a particular market movement or trend. It provides insight into the overall health and strength of market trends by assessing how many stocks are moving in the same direction as the index or overall market.

When the majority of stocks are participating in a rally, it suggests strong market momentum. Conversely, if a market is rising but few stocks are participating, it could indicate a weaker trend and potential reversal. This relationship allows traders to gauge whether the market movement is broad and sustainable or narrow and potentially vulnerable.

The other options focus on different aspects of market analysis. Measuring the price movement of a single stock does not capture the broader market sentiment, while assessing trade volume provides information about how actively assets are bought and sold but does not convey whether the market trend is comprehensive. Examining volatility looks at the degree of price variation within a market but does not necessarily indicate the strength or breadth of participation in a trend.