Construct a five-week new-highs total as a breadth chart

Assemble the breadth series

Market breadth is a participation reading that asks whether enough issues are confirming a move. In this workflow that reading is expressed through new highs rather than an advance/decline line.

The series is built as a running five-week total of the weekly new-highs count, refreshed each week by adding the latest reading and subtracting the oldest.

Editorial: TradersWeek treats this as breadth you assemble, not a finished line you wait to be given. The new-highs total is meant to sit as its own chart, where trendlines can be drawn.

Keep the window simple

A five-week window was selected after other lookbacks were tried, on the grounds that it produced a simple chart with few whipsaws.

The constructed series was presented as tracking market breadth while taking less upkeep than an advance/decline line.

Read the total with ordinary chart methods

Once plotted, the new-highs total is meant to be analyzed with ordinary chart methods, especially trendlines and triangle support and resistance.

A trendline on this plot is a slope or boundary drawn on the new-highs chart so breaks, triangles, and support or resistance can be read on the constructed series itself.

Treat a falling total as a clear decline

In a genuine decline the five-week total is described as printing fewer and fewer new highs, so a falling reading is not treated as ambiguous.

After a decline, the total is expected to lag a new advance because new highs take time to reappear, and that lag is offered as a filter against early reversals.

Compare the total with price and with an advance/decline line

Divergence, in this workflow, is a split in which a price average keeps advancing while the new-highs total rolls over or fails to confirm.

In the mid-1986 example the new-highs total turned down while major averages were still rising, which was labeled a top-forming condition.

A later stretch in which the new-highs total fell sharply while an advance/decline measure stayed near the 60s was read as consolidation rather than broad confirmation.

Divergence between the new-highs series and price at later labeled points was described as preceding the 1987 advance, in an episode called isolated.

Editorial: TradersWeek does not generalize from that isolated stretch. The construction still stands as a chart you can trendline, not as a claim that every later split behaves the same way.