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 2026-07-31
Alerts — misleading strength & real weakness
Nasdaq Ex-Top-30 Breadth rising mainly because QTOP fell sharply — a mechanically misleading improvement.
- Ratio +4% over 21d
- Quality score 22/100 (Denominator collapse)
- Denominator-driven (75% of the move)
Credit Breadth rising mainly because LQD fell sharply — a mechanically misleading improvement.
- Ratio +1.9% over 21d
- Quality score 6/100 (Denominator collapse)
- Denominator-driven (94% of the move)
Semiconductor Leadership falling on SMH weakness — SMH dropping faster than XLK, a high-quality warning.
- Ratio -7.8% over 21d
- Quality score 63/100 (numerator-driven)
- Single-horizon
Micro-Cap Breadth falling on IWC weakness — IWC dropping faster than IWM, a high-quality warning.
- Ratio -3.7% over 21d
- Quality score 70/100 (numerator-driven)
- Confirmed across 1d/21d/63d
AI Participation falling on AIQ weakness — AIQ dropping faster than XLK, a high-quality warning.
- Ratio -2% over 21d
- Quality score 51/100 (numerator-driven)
- Single-horizon
Cyclical Breadth falling on XLI weakness — XLI dropping faster than XLU, a high-quality warning.
- Ratio -1% over 21d
- Quality score 52/100 (numerator-driven)
- Single-horizon
Every ratio — decomposed (21-day)
| Ratio | State | Quality | Driver | Num | Den | Ratio | TF |
|---|---|---|---|---|---|---|---|
| Credit Breadth HYG/LQD | ▲ Denominator collapse | 6 | denominator | -0.1% | -2% | +1.9% | aligned |
| Nasdaq Ex-Top-30 Breadth QNXT/QTOP | ▲ Denominator collapse | 22 | denominator | -1.9% | -5.6% | +4% | mixed |
| Nasdaq-100 Equal-Weight Breadth QQQE/QQQ | ▲ Defensive improvement | 35 | denominator | -3.3% | -5.1% | +1.9% | mixed |
| High-Beta Breadth SPHB/SPLV | ▼ Absolute weakness | 65 | numerator | -8.2% | +1.5% | -9.5% | mixed |
| S&P 500 Equal-Weight Breadth RSP/SPY | ▲ Absolute leadership | 72 | numerator | +0.7% | +0.2% | +0.6% | mixed |
| Ex-Mag-7 Breadth XMAG/SPY | ▼ Absolute weakness | 81 | numerator | -1.9% | +0.2% | -2% | mixed |
| Small-Cap Breadth IWM/SPY | ▼ Absolute weakness | 83 | numerator | -2.7% | +0.2% | -2.9% | mixed |
| Nasdaq Ex-Tech Breadth QQXT/QQQ | ▲ Absolute leadership | 18 | denominator | +1.6% | -5.1% | +7.1% | mixed |
| Consumer Risk Breadth XLY/XLP | ▼ Absolute weakness | 40 | denominator | -1.7% | +2.1% | -3.7% | mixed |
| Cyclical Breadth XLI/XLU | ▼ Strong deterioration | 52 | numerator | -1.9% | -0.9% | -1% | mixed |
| Semiconductor Leadership SMH/XLK | ▼ Strong deterioration | 63 | numerator | -12.9% | -5.5% | -7.8% | mixed |
| Ex-Tech S&P Breadth SPXT/SPY | ▲ Absolute leadership | 78 | numerator | +1.3% | +0.2% | +1.1% | mixed |
| Mid-Cap Breadth MDY/SPY | ▼ Absolute weakness | 90 | numerator | -1.5% | +0.2% | -1.7% | aligned |
| Software Participation IGV/XLK | ▲ Absolute leadership | 19 | denominator | +1.3% | -5.5% | +7.3% | aligned |
| Financial Risk Breadth KBE/XLU | ▲ Absolute leadership | 29 | denominator | +0.4% | -0.9% | +1.3% | aligned |
| Large Growth vs Value IWF/IWD | ▼ Absolute weakness | 48 | numerator | -3.8% | +3.3% | -6.9% | mixed |
| AI Participation AIQ/XLK | ▼ Strong deterioration | 51 | numerator | -7.4% | -5.5% | -2% | mixed |
| Micro-Cap Breadth IWC/IWM | ▼ Strong deterioration | 70 | numerator | -6.3% | -2.7% | -3.7% | aligned |
| Nasdaq Tech vs Ex-Tech QTEC/QQXT | ▼ Absolute weakness | 75 | numerator | -8.5% | +1.6% | -9.9% | mixed |
| Extended-Market Breadth VXF/SPY | ▼ Absolute weakness | 84 | numerator | -3.6% | +0.2% | -3.7% | mixed |
| Small Growth Breadth IWO/IWN | ▼ Absolute weakness | 96 | numerator | -5.2% | -0.2% | -5% | aligned |
| Internet Participation FDN/XLK | ▲ Absolute leadership | 22 | denominator | +1.9% | -5.5% | +7.9% | 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.