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Yahoo
29-04-2025
- Business
- Yahoo
The Market Just Did Something for Only the 20th Time Since World War II, and History Says There's a 100% Probability of Where Stocks Go Next
At the Fool, we preach the notion of Foolish Investing. This involves regular and dispassionate additions to your stock portfolio on a regular basis, a concentration in high-quality companies, and a long-term investing mindset. But hey, looking at technical indicators to supplement our fundamental investing ethos couldn't hurt either, could it? Technical indicators may also be especially valuable in times like today, as investors debate whether the market has hit a bottom earlier this month after a brutal stock market correction over the past couple months. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Fortunately for bullish investors, one technical indicator was just achieved late last week, and it has a 19-for-19 track record of predicting higher markets within six months and one year out. On Thursday, April 24, an indicator known as the Zweig Breadth Thrust was triggered for the S&P 500 index (SNPINDEX: ^GSPC). This technical indicator was developed by investor Martin Zweig, author of a famous investing tome Winning on Wall Street in 1986. The indicator is calculated by tabulating the change in the 10-day exponential moving average of advancing stocks against the total number of stocks in an index over a 10-day period. In the case of the Zweig Breadth Thrust, the indicator is triggered when the index, in this case the S&P 500, goes from below a 40% 10-day EMA of advancing stocks to a greater than 61.5% proportion of advancing stocks within a span of 10 trading days. The indicator may seem complex and somewhat arbitrary, but if you think about it, the concept is simple. The rapid change in the number of advancing stocks indicates that a falling market with broad-based weakness has rapidly switched to a market with upwards momentum, but which is not yet "overbought." According to Ryan Detrick citing Carson Investment Research and Ned Davis Research on X, a Zweig Breadth Thrust was achieved last Thursday. This is the first ZBT since November of 2023, and just the 20th such instance since World War II. The indicator is very rare, as you can tell, with the extreme bearish-to-bullish sentiment change happening just once every four years on average. As you can see below, when a ZBT does occur, stocks usually perform extremely well in the following period: Following the previous 19 Zweig Breadth Thrust triggers going back to 1943, the S&P 500 was higher one month later 95% of the time, higher three months later 79% of the time, and always higher six and twelve months later, with median six and 12-month returns of 13.2% and 24.8%, respectively. Needless to say, those are quite healthy returns over such a time period. Thus, if one has been sitting on one's hands waiting for more clarity on the tariff controversy and/or potential recession before buying stocks, this indicator may give you reason to put at least some of that idle cash to work in your favorite stocks right now. While the Zweig Breadth Thrust does have a perfect track record, it's also not a foolproof guarantee. Remember, technical indicators are just measuring movements in stocks, which serve as a barometer for investor sentiment. Technical indicators don't predict global trade wars spiraling out of control or stagflationary recessions, which are still possibilities. Looking back at the prior examples, none of these breadth thrusts happened as a bear market was still unfolding, but rather after months-long bear markets had already occurred. The examples from the mid-1970s, for instance, happened after a dreadful bear market in 1973-1974. The example from 2009 happened after the massive six-month drawdown beginning in October 2008, which was the beginning of the Great Financial Crisis. So, if we are going into a recession later this year as the result of the administration's tariff policies and a still-tight Federal Reserve, it's possible the ZBT won't work this time around. Right now, Wall Street analysts give a recession about even odds. But the recent action in stocks points to investors apparently disbelieving we will have an actual recession. Investors may be anticipating a mere "growth scare," as what occurred before the January 2019 ZBT. That ZBT was triggered after the late 2018 19% stock market correction that stopped just short of a full-on bear market, but which ultimately didn't lead to a recession. Perhaps since that scenario occurred during Trump's first term under similar circumstances to today, investors are dusting off a similar playbook. But this time, there is more uncertainty. Although the administration did give a 90-day "pause" on tariffs for trade negotiations to take place, we still don't know whether these deals will come to pass. Moreover, even if they do, the administration is still likely to maintain the 10% universal tariffs on most goods from most countries. So even in a best-case scenario where many trade deals are consummated, tariffs will still probably still be higher than they have been in the past. So while the Zweig Breadth Thrust is a very positive sign that investors believe trade deals will be coming and recession will be avoided, neither of those conclusions is a certainty. Overall, it's best to stick with a steady and dispassionate investing plan by adding to your portfolio in set allocations at steady intervals, rather than trying to guess where a market bottom may be... or whether it's already happened. Before you buy stock in S&P 500 Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and S&P 500 Index wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $594,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $680,390!* Now, it's worth noting Stock Advisor's total average return is 872% — a market-crushing outperformance compared to 160% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 21, 2025 Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. The Market Just Did Something for Only the 20th Time Since World War II, and History Says There's a 100% Probability of Where Stocks Go Next was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
24-04-2025
- Business
- Yahoo
There's an ultra-rare bullish signal on the verge of flashing in the stock market
The stock market is close to flashing a rare bullish signal. The indicator measures broad stock market participation in an ongoing rally. Historically, the signal predicts strong S&P 500 gains in the following months. The stock market is about to flash an incredibly rare bullish signal: the Zweig Breadth Thrust Indicator. The signal looks at 10-day trading intervals in the stock market. If it does flash, it would suggest that stocks are about to enter a new bullish phase and that the tariff-induced decline from earlier this month represented "the" bottom for risk assets. The indicator measures overall participation among individual securities in the stock market's rally. It was developed by investor and author of "Winning on Wall Street, Martin Zweig. Since 1945, the indicator has only flashed 18 times, with the most recent signal occurring in November 2023. The indicator is calculated by taking a 10-day moving average of the number of advancing stocks divided by the number of advancing stocks plus the number of declining stocks. The calculation derives a percentage, and when it falls below 40% and then surges above 61.5% in 10 days or less, the indicator is triggered. The indicator's countdown began on April 11, when the ratio jumped above 40%. According to data from it has since risen to 61.34% as of Thursday morning. The 10th day of the countdown clock is Friday, so stocks need to muster a continued rally driven by broad participation to flash the bullish signal. Ryan Detrick, chief market strategist at Carson Group, has been closely following the indicator over the past week. "Although the computation is a tad confusing, the bottom line is many stocks went from oversold to overbought in a short time frame," Detrick told BI. "This is what you tend to see at the beginning of new bullish phases." The Zweig Breadth Thrust Indicator has a perfect track record of predicting positive stock market gains in the six and twelve months after it flashes. According to Detrick, of the 18 times the signal has flashed, the average forward 6- and 12-month returns for the S&P 500 are 15.3% and 24.0%, respectively. Read the original article on Business Insider Sign in to access your portfolio
Business Insider
24-04-2025
- Business
- Business Insider
There's an ultra-rare bullish signal on the verge of flashing in the stock market
The stock market is about to flash an incredibly rare bullish signal: the Zweig Breadth Thrust Indicator. The signal looks at 10-day trading intervals in the stock market. If it does flash, it would suggest that stocks are about to enter a new bullish phase and that the tariff-induced decline from earlier this month represented "the" bottom for risk assets. What is the Zweig Breadth Thrust Indicator? The indicator measures overall participation among individual securities in the stock market's rally. It was developed by investor and author of "Winning on Wall Street, Martin Zweig. Since 1945, the indicator has only flashed 18 times, with the most recent signal occurring in November 2023. What needs to happen for the signal to flash? The indicator is calculated by taking a 10-day moving average of the number of advancing stocks divided by the number of advancing stocks plus the number of declining stocks. The calculation derives a percentage, and when it falls below 40% and then surges above 61.5% in 10 days or less, the indicator is triggered. The indicator's countdown began on April 11, when the ratio jumped above 40%. According to data from it has since risen to 61.34% as of Thursday morning. The 10th day of the countdown clock is Friday, so stocks need to muster a continued rally driven by broad participation to flash the bullish signal. Ryan Detrick, chief market strategist at Carson Group, has been closely following the indicator over the past week. "Although the computation is a tad confusing, the bottom line is many stocks went from oversold to overbought in a short time frame," Detrick told BI. "This is what you tend to see at the beginning of new bullish phases." What comes next after the indicator flashes? The Zweig Breadth Thrust Indicator has a perfect track record of predicting positive stock market gains in the six and twelve months after it flashes. According to Detrick, of the 18 times the signal has flashed, the average forward 6- and 12-month returns for the S&P 500 are 15.3% and 24.0%, respectively. Carson Group
