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When most traders look at the market, they’re glued to price.
Is the S&P 500 (SPY) up or down?
Did we break resistance?
What’s the Nasdaq 100 (QQQ) doing?
I get it — price matters. But if you’re not tracking what percentage of stocks are trading above their 50- and 200-day moving averages (MA), you’re missing the real story behind the move.
This is market breadth, and when you understand how to read it, you know whether to trust a rally or fade it long before most people even realize what’s happening.
I recently highlighted a series of charts showing how participation was expanding beneath the surface, and it’s worth reiterating that point because the continuation we’ve seen lines up perfectly with that earlier strength.
The 60% Threshold That Changes Everything
For the 50-day MA, being above 60% is the key threshold. That means six out of every 10 stocks are at or near their all-time highs.
When you see that kind of participation, you know the move has legs.
Recently, the market dipped below that 60% level but held the line.
That kind of behavior isn’t a warning sign — it’s confirmation. Buyers stepped in, breadth stabilized and the move higher resumed.
The ideal range is 60-70%, but 70% can be a bit overextended and 80% is definitely stretched, so when you’re in that 60-70% pocket, you’re in the sweet spot.
It’s strong without being overheated.
The 200-Day Tells a Similar Story
I also track the percentage of stocks above their 200-day MA to get a longer-term view of market health.
In a fair, healthy market, you want to be above 60%. A very strong market gets above 70%, and while we haven’t broken through that level yet, we’re holding where we need to.
Here too, we dipped into the 60% zone, held, and bounced. That’s structure — not fragility.
I expect markets to remain strong following this bounce. The breadth is there, the participation is there and when both the 50- and 200-day breadth metrics are in healthy zones, that’s when I’m most confident pressing setups.
So next time you’re evaluating a trade, don’t just look at the chart. Check the breadth. It’ll tell you whether the move is real — or just noise.
Now don’t forget to join us at 10 a.m. ET weekdays for Opening Playbook!
Graham Lindman
Graham Lindman Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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