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Possible, But Rare, Bull Market Signal Could Be Brewing

As the stock market is in bounce mode since the market bottom last week, a rare but powerful bull market signal may be brewing. I am indebted to Walter Murphy who

a possible setup for a Zweig Breadth Thrust buy signal last week:

Murphy Tweet

The Zweig Breadth Thrust is sort of an IBD follow-through day pattern, but on steroids. Steven Achelis at Metastock explained the indicator this way (emphasis added):

A "Breadth Thrust" occurs when, during a 10-day period, the Breadth Thrust indicator rises from below 40% to above 61.5%. A "Thrust" indicates that the stock market has rapidly changed from an oversold condition to one of strength, but has not yet become overbought. According to Dr. Zweig, there have only been fourteen Breadth Thrusts since 1945. The average gain following these fourteen Thrusts was 24.6% in an average time-frame of eleven months. Dr. Zweig also points out that most bull markets begin with a Breadth Thrust.

The Breadth Thrust is a rare but powerful bull signal that presages significant gains ahead for the stock market, should its conditions be satisfied. Day 0 was last Tuesday, August 25. Here is the chart of the S&P 500 so far. The Breadth Thrust Indicator has 10 trading days to accomplish its task of getting over 61.5%:

SPX Daily

An example of the Zweig Breadth...


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