Market X-Ray · Toolbox 3
Ratio-Quality Decomposition
A rising ratio is ambiguous. IWM/SPY can rise because small-caps led — or because the S&P fell. This decomposes every structural ratio into what the numerator did versus the denominator, and scores how meaningful the move is: numerator-driven and consistent across horizons = high quality; denominator-driven or one-horizon = low quality, mechanically misleading. Quality is reliability, not direction.
Updated daily · data as of 2026-08-03
Alerts — misleading strength & real weakness
Cyclical Breadth rising mainly because XLU fell sharply — a mechanically misleading improvement.
- Ratio +2.7% over 21d
- Quality score 12/100 (Denominator collapse)
- Denominator-driven (88% of the move)
Credit Breadth rising mainly because LQD fell sharply — a mechanically misleading improvement.
- Ratio +1.9% over 21d
- Quality score 1/100 (Denominator collapse)
- Denominator-driven (99% of the move)
Semiconductor Leadership falling on SMH weakness — SMH dropping faster than XLK, a high-quality warning.
- Ratio -6.6% over 21d
- Quality score 85/100 (numerator-driven)
- Confirmed across 1d/21d/63d
High-Beta Breadth falling on SPHB weakness — SPHB dropping faster than SPLV, a high-quality warning.
- Ratio -2.5% over 21d
- Quality score 66/100 (numerator-driven)
- Single-horizon
Micro-Cap Breadth falling on IWC weakness — IWC dropping faster than IWM, a high-quality warning.
- Ratio -1.9% over 21d
- Quality score 69/100 (numerator-driven)
- Single-horizon
AI Participation falling on AIQ weakness — AIQ dropping faster than XLK, a high-quality warning.
- Ratio -0.7% over 21d
- Quality score 53/100 (numerator-driven)
- Single-horizon
Every ratio — decomposed (21-day)
| Ratio | State | Quality | Driver | Num | Den | Ratio | TF |
|---|---|---|---|---|---|---|---|
| Credit Breadth HYG/LQD | ▲ Denominator collapse | 1 | denominator | 0% | -1.9% | +1.9% | aligned |
| Small-Cap Breadth IWM/SPY | ▼ Absolute weakness | 16 | denominator | -0.5% | +1.7% | -2.2% | mixed |
| Ex-Mag-7 Breadth XMAG/SPY | ▼ Absolute weakness | 29 | denominator | -0.8% | +1.7% | -2.5% | mixed |
| S&P 500 Equal-Weight Breadth RSP/SPY | ▼ Lagging in rally | 33 | denominator | +1% | +1.7% | -0.7% | mixed |
| Nasdaq Ex-Top-30 Breadth QNXT/QTOP | ▲ Defensive improvement | 34 | denominator | -1% | -1.6% | +0.6% | mixed |
| Nasdaq-100 Equal-Weight Breadth QQQE/QQQ | ▲ Defensive improvement | 38 | denominator | -1.3% | -1.8% | +0.5% | mixed |
| High-Beta Breadth SPHB/SPLV | ▼ Strong deterioration | 66 | numerator | -3% | -0.5% | -2.5% | mixed |
| Mid-Cap Breadth MDY/SPY | ▼ Numerator lag | 3 | denominator | +0.1% | +1.7% | -1.6% | aligned |
| Cyclical Breadth XLI/XLU | ▲ Denominator collapse | 12 | denominator | -0.4% | -3.1% | +2.7% | aligned |
| Nasdaq Ex-Tech Breadth QQXT/QQQ | ▲ Absolute leadership | 27 | denominator | +0.9% | -1.8% | +2.8% | mixed |
| Ex-Tech S&P Breadth SPXT/SPY | · Flat | 50 | denominator | +1.7% | +1.7% | 0% | aligned |
| Consumer Risk Breadth XLY/XLP | ▲ Absolute leadership | 76 | numerator | +0.9% | -0.2% | +1.1% | mixed |
| Semiconductor Leadership SMH/XLK | ▼ Strong deterioration | 85 | numerator | -7.9% | -1.4% | -6.6% | aligned |
| Large Growth vs Value IWF/IWD | ▼ Numerator lag | 7 | denominator | -0.2% | +3% | -3.2% | mixed |
| Extended-Market Breadth VXF/SPY | ▼ Absolute weakness | 31 | denominator | -1.1% | +1.7% | -2.8% | mixed |
| Financial Risk Breadth KBE/XLU | ▲ Absolute leadership | 47 | denominator | +2.8% | -3.1% | +6% | aligned |
| AI Participation AIQ/XLK | ▼ Strong deterioration | 53 | numerator | -2.1% | -1.4% | -0.7% | mixed |
| Small Growth Breadth IWO/IWN | ▼ Absolute weakness | 54 | numerator | -2.2% | +1.4% | -3.6% | mixed |
| Nasdaq Tech vs Ex-Tech QTEC/QQXT | ▼ Absolute weakness | 61 | numerator | -3.6% | +0.9% | -4.5% | mixed |
| Micro-Cap Breadth IWC/IWM | ▼ Strong deterioration | 69 | numerator | -2.4% | -0.5% | -1.9% | mixed |
| Software Participation IGV/XLK | ▲ Absolute leadership | 74 | numerator | +4.1% | -1.4% | +5.6% | aligned |
| Internet Participation FDN/XLK | ▲ Absolute leadership | 71 | numerator | +5.9% | -1.4% | +7.4% | mixed |
How to read it
Using log returns, ratio return = numerator return − denominator return, so each leg's contribution is exact. The quality score is the numerator's share of the move scaled by how consistently the ratio points the same way across 1, 21 and 63 days — high when the asset we track is genuinely the story, low when the move is a denominator artifact. Misleading strength = a ratio rising on a denominator collapse; real weakness = a ratio falling because the numerator itself is deteriorating, confirmed across horizons.
For information and discussion only — a reading of market internals, not investment advice. Thresholds are uncalibrated pending the planned backtest. Pairs with Breadth-of-Breadth and the Beta-Instability X-Ray.