Concept
Participation Divergence at Index Highs
Participation Divergence at Index Highs, also known as breadth washout markers, 90% down days, are Breadth, Sentiment & External Data concepts. The Library holds 1 implementations, each one a working definition you can pull into Quant.
Top Participation Divergence at Index Highs indicators
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What is Participation Divergence at Index Highs?
Participation divergence at index highs is the breadth analyst's core warning pattern: a cap-weighted index prints a new high while the measures of participation underneath it do not. The advance/decline line fails to confirm, net new highs shrink, and the share of stocks above their own moving averages rolls over. The index is being carried by fewer, larger names, and the average stock has already stopped going up.
The same lens is applied at the opposite extreme. Breadth washout markers such as 90% down days, sessions where at least 90% of up-plus-down volume and at least 90% of points gained and lost land on the declining side, describe near-total participation in selling. In the research tradition begun by Paul Desmond at Lowry, clusters of such days characterize capitulation, and durable lows tended to require panic selling followed by comparably lopsided buying. Both readings describe participation quality; neither is a standalone timing signal.
How traders use it
- As a topping filter: when an index makes a new high, check whether A/D internals, net new highs, and the share of stocks above their 50- and 200-day averages confirm it. Persistent non-confirmation has preceded some major tops, though divergences can also repair without any decline following.
- As washout markers: clustered 90% down days flag indiscriminate liquidation, and frameworks built on Desmond's work then look for a follow-on 90% up day or a breadth thrust as evidence that real demand returned.
- As regime context: narrowing participation argues for tighter risk and more selective longs rather than an immediate reversal trade, since cap-weighted trends can run long after the average stock stalls.
Related concepts · Breadth
Concept family
Breadth, Sentiment & External Data
63 concepts mapped · 61 in the Library
Participation Divergence at Index Highs FAQ
Does a breadth divergence at new highs mean the market is about to top?
No. Non-confirmations have preceded several major tops, but lead times ranged from weeks to more than a year, and some divergences resolved when participation broadened again. The pattern is information about fragility, not timing. Most practitioners require price confirmation, such as a break of swing support, before treating a divergence as actionable.
What counts as a 90% down day?
In the Lowry Research definition, a session where downside volume is at least 90% of the sum of upside and downside volume, and points lost are at least 90% of total points gained and lost. Such days mark panic-grade selling. The research associated durable bottoms with clusters of them followed by similarly lopsided up days, though that sequence is a tendency, not a requirement.
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