The Zweig Breadth Thrust just flashed again, marking a significant shift in market momentum that has many analysts anticipating further gains. This rare technical event occurs when the 10-day average of advancing stocks jumps from under 40% to over 61.5%—a sign that optimism is spreading broadly across the stock market.
This signal has only occurred 19 times over the past 80 years, making it a notable moment for long-term investors. According to Carson Group’s chief market strategist Ryan Detrick, whenever this signal has appeared since World War II, the S&P 500 has posted gains six and twelve months later—every single time. The average returns? A solid 14.8% over six months and 23.4% over one year.
Zweig Breadth Thrust and Market Confidence
Analysts believe the Zweig Breadth Thrust reflects a surge in widespread buying, signaling renewed confidence in the markets. The latest signal follows a rebound in stocks after recent trade-related tensions between the U.S. and China. The White House, despite imposing 145% in tariffs this year, is reportedly looking to cool tensions, which has also helped lift investor sentiment.
The S&P 500 has already shown strength with three consecutive sessions gaining more than 1.5%, and markets were slightly higher on Friday, continuing the upward momentum.
Zweig Breadth Thrust: A Proven but Not Perfect Indicator
Not everyone is fully convinced of the Zweig Breadth Thrust’s predictive power. Technical analyst Tom McClellan has pointed out that during the early 1930s, similar breadth thrusts led to short-lived rallies, which quickly fizzled out amid a larger bear market.
Even more recently, in 2015, a signal emerged right after a market high, but the resulting gains were modest—just 1.4% over six months and 7% over a year. So while history leans bullish, some urge caution, noting that even strong indicators can deliver mixed results depending on broader market conditions.
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Source: www.investopedia.com
