There are three lines on the chart
Using Long Term Breadth
When long term Breadth is positive, it shows that the long term market sentiment is positive and there is a greater probability of prices rising going forward. When long term breadth closes above 0 on month end basis, it can be a good time to start accumulating stocks for the long term. When breadth is negative, it shows that the market sentiment is broadly negative and it may be a good time to hedge ones long term positions, book profits or stay away from market at this time.
Using Short Term Breadth
In this interpretation, when Long term breadth is negative and when short term turns positive, it is time to buy for the short term. This indicator can only be used for short term.
Value BuyersThis interpretation is useful for investors doing “SIP” into stocks or equity mutual funds. Good time for such investors is to buy when Long Term Breadth is Negative and Short Term is at the bottom.