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 2026-11-10
Alerts — misleading strength & real weakness
Nasdaq Ex-Top-30 Breadth rising mainly because QTOP fell sharply — a mechanically misleading improvement.
- Ratio +10.8% over 21d
- Quality score 16/100 (Denominator collapse)
- Denominator-driven (84% of the move)
Ex-Mag-7 Breadth rising mainly because SPY fell sharply — a mechanically misleading improvement.
- Ratio +2.6% over 21d
- Quality score 21/100 (Denominator collapse)
- Denominator-driven (77% of the move)
Extended-Market Breadth rising mainly because SPY fell sharply — a mechanically misleading improvement.
- Ratio +3% over 21d
- Quality score 13/100 (Denominator collapse)
- Denominator-driven (83% of the move)
Semiconductor Leadership falling on SMH weakness — SMH dropping faster than XLK, a high-quality warning.
- Ratio -4.9% over 21d
- Quality score 50/100 (numerator-driven)
- Single-horizon
Every ratio — decomposed (21-day)
| Ratio | State | Quality | Driver | Num | Den | Ratio | TF |
|---|---|---|---|---|---|---|---|
| Nasdaq Ex-Top-30 Breadth QNXT/QTOP | ▲ Denominator collapse | 16 | denominator | -2.3% | -11.8% | +10.8% | aligned |
| Small-Cap Breadth IWM/SPY | ▲ Absolute leadership | 16 | denominator | +1% | -3.6% | +4.8% | mixed |
| Credit Breadth HYG/LQD | ▼ Numerator lag | 16 | denominator | +0.4% | +1.7% | -1.3% | mixed |
| Ex-Mag-7 Breadth XMAG/SPY | ▲ Denominator collapse | 21 | denominator | -1.1% | -3.6% | +2.6% | mixed |
| Nasdaq-100 Equal-Weight Breadth QQQE/QQQ | ▲ Defensive improvement | 33 | denominator | -4.8% | -9.6% | +5.3% | aligned |
| S&P 500 Equal-Weight Breadth RSP/SPY | ▲ Absolute leadership | 49 | denominator | +3.6% | -3.6% | +7.5% | aligned |
| High-Beta Breadth SPHB/SPLV | ▼ Absolute weakness | 62 | numerator | -11.2% | +7.5% | -17.4% | aligned |
| Cyclical Breadth XLI/XLU | ▼ Numerator lag | 5 | denominator | -0.2% | +5% | -5% | aligned |
| Mid-Cap Breadth MDY/SPY | ▲ Absolute leadership | 22 | denominator | +1.3% | -3.6% | +5.2% | mixed |
| Nasdaq Ex-Tech Breadth QQXT/QQQ | ▲ Absolute leadership | 29 | denominator | +4.2% | -9.6% | +15.2% | aligned |
| Ex-Tech S&P Breadth SPXT/SPY | ▲ Absolute leadership | 39 | denominator | +2.4% | -3.6% | +6.2% | aligned |
| Consumer Risk Breadth XLY/XLP | · Flat | 50 | denominator | +7.8% | +7.8% | 0% | aligned |
| Semiconductor Leadership SMH/XLK | ▼ Strong deterioration | 50 | numerator | -18.2% | -14% | -4.9% | mixed |
| Small Growth Breadth IWO/IWN | ▼ Numerator lag | 7 | denominator | +0.1% | +1.8% | -1.7% | aligned |
| Extended-Market Breadth VXF/SPY | ▲ Denominator collapse | 13 | denominator | -0.8% | -3.6% | +3% | mixed |
| Financial Risk Breadth KBE/XLU | ▲ Strong leadership | 39 | numerator | +5.4% | +5% | +0.3% | mixed |
| Software Participation IGV/XLK | ▲ Defensive improvement | 41 | denominator | -9.8% | -14% | +4.8% | aligned |
| AI Participation AIQ/XLK | ▲ Defensive improvement | 45 | denominator | -11.4% | -14% | +3% | aligned |
| Micro-Cap Breadth IWC/IWM | ▼ Absolute weakness | 74 | numerator | -2.7% | +1% | -3.7% | aligned |
| Large Growth vs Value IWF/IWD | ▼ Absolute weakness | 78 | numerator | -10.3% | +3.1% | -13% | aligned |
| Nasdaq Tech vs Ex-Tech QTEC/QQXT | ▼ Absolute weakness | 79 | numerator | -14.7% | +4.2% | -18.1% | aligned |
| Internet Participation FDN/XLK | ▲ Defensive improvement | 42 | denominator | -10.4% | -14% | +4.2% | aligned |
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.
FAQ · from the current data · as of 2026-11-10
Quick answers
What does Ratio-Quality Decomposition measure?
A rising ratio is ambiguous — it can mean the numerator led (real) or the denominator collapsed (misleading). 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 scores high; denominator-driven or single-horizon scores low.
What is the average ratio quality right now?
As of 2026-11-10, the average quality score across tracked ratios is 38 out of 100, with 27.3% of ratios numerator-driven.
How many ratios are showing misleading strength or real weakness?
As of 2026-11-10, 3 ratios are rising on low quality (misleading strength) and 1 are falling on genuine numerator weakness (real weakness).
How is the quality score calculated?
Using log returns, ratio return equals numerator return minus 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 tracked asset is genuinely the story, low when the move is a denominator artifact.