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 2026-08-07
Alerts — misleading strength & real weakness
No high-severity ratio-quality alerts right now.
Every ratio — decomposed (21-day)
| Ratio | State | Quality | Driver | Num | Den | Ratio | TF |
|---|---|---|---|---|---|---|---|
| Small-Cap Breadth IWM/SPY | ▼ Lagging in rally | 26 | denominator | +1.5% | +2.9% | -1.4% | mixed |
| Ex-Mag-7 Breadth XMAG/SPY | ▼ Lagging in rally | 28 | denominator | +1.6% | +2.9% | -1.2% | mixed |
| Credit Breadth HYG/LQD | ▲ Absolute leadership | 32 | denominator | +0.3% | -0.6% | +1% | aligned |
| High-Beta Breadth SPHB/SPLV | ▼ Absolute weakness | 39 | numerator | -1.2% | +1.1% | -2.3% | mixed |
| S&P 500 Equal-Weight Breadth RSP/SPY | ▲ Flat | 52 | numerator | +3.1% | +2.9% | +0.2% | aligned |
| Nasdaq Ex-Top-30 Breadth QNXT/QTOP | ▲ Absolute leadership | 85 | numerator | +1.7% | -0.3% | +2.1% | aligned |
| Nasdaq-100 Equal-Weight Breadth QQQE/QQQ | ▲ Absolute leadership | 97 | numerator | +1.2% | 0% | +1.2% | aligned |
| Cyclical Breadth XLI/XLU | ▲ Absolute leadership | 35 | denominator | +2.2% | -3.4% | +5.8% | mixed |
| Mid-Cap Breadth MDY/SPY | ▼ Flat | 43 | denominator | +2.7% | +2.9% | -0.1% | mixed |
| Ex-Tech S&P Breadth SPXT/SPY | ▼ Lagging in rally | 44 | denominator | +2.2% | +2.9% | -0.6% | aligned |
| Consumer Risk Breadth XLY/XLP | ▲ Flat | 47 | numerator | +2.6% | +2.3% | +0.3% | mixed |
| Semiconductor Leadership SMH/XLK | ▼ Absolute weakness | 66 | numerator | -4.1% | +1.4% | -5.5% | mixed |
| Nasdaq Ex-Tech Breadth QQXT/QQQ | ▲ Absolute leadership | 99 | numerator | +3.8% | 0% | +3.8% | aligned |
| Small Growth Breadth IWO/IWN | ▼ Numerator lag | 10 | denominator | +0.3% | +2.7% | -2.3% | mixed |
| Large Growth vs Value IWF/IWD | ▼ Numerator lag | 17 | denominator | +1.1% | +4.5% | -3.3% | mixed |
| Nasdaq Tech vs Ex-Tech QTEC/QQXT | ▼ Absolute weakness | 23 | denominator | -1.6% | +3.8% | -5.2% | mixed |
| Extended-Market Breadth VXF/SPY | ▼ Lagging in rally | 30 | denominator | +1.9% | +2.9% | -1% | mixed |
| Micro-Cap Breadth IWC/IWM | ▼ Lagging in rally | 31 | denominator | +1% | +1.5% | -0.5% | mixed |
| AI Participation AIQ/XLK | ▼ Absolute weakness | 31 | denominator | -0.8% | +1.4% | -2.1% | mixed |
| Financial Risk Breadth KBE/XLU | ▲ Absolute leadership | 36 | denominator | +2.4% | -3.4% | +6% | mixed |
| Software Participation IGV/XLK | ▲ Strong leadership | 86 | numerator | +9.4% | +1.4% | +7.9% | aligned |
| Internet Participation FDN/XLK | ▲ Strong leadership | 68 | numerator | +5% | +1.4% | +3.5% | 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.
FAQ · from the current data · as of 2026-08-07
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 2026-08-07, the average quality score across tracked ratios is 47 out of 100, with 40.9% of ratios numerator-driven.
How many ratios are showing misleading strength or real weakness?
As of 2026-08-07, 0 ratios are rising on low quality (misleading strength) and 0 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.