What does the Schultz Index measure?

The Schultz Index is designed to measure the number of advancing stocks as a percentage of total issues. It serves as a breadth indicator, providing insight into the overall health and direction of the market. By focusing on advancing stocks, the Schultz Index can help identify whether a market rally is supported by a broad base of participation or if it's primarily driven by a small number of stocks.

When the index shows a high percentage of advancing stocks, it typically reflects strong market momentum and confirms bullish market sentiment. Conversely, a low percentage of advancing stocks can indicate a lack of breadth and may suggest that a rally is less sustainable.

This focus on the number of advancing stocks differentiates the Schultz Index from other measures like market volume trends, changes in stock prices, or the difference between high and low stock prices, which focus on different aspects of market behavior. Each of those other measures serves a distinct purpose in technical analysis but does not capture the breadth of market participation as effectively as the Schultz Index.