In fact, this is the second Zweig Breadth Thrust this year – and that makes the historical precedent even more optimistic.
• The recent upward market momentum has been so strong that it triggered an ultra-rare technical indicator that only flashes when the market is just beginning a major recovery.
• In the 17 previous instances when this indicator was triggered, stocks rose 6 and 12 months later, 100% of the time. Average future return at six months? Around 15%. Average future return at 12 months? Over 23%.
• We saw a Zweig Breadth Thrust at the end of March and another in November. This means we've seen two Zweig Breadth Thrusts in less than 12 months. The fact that this is the second ZBT signal in 12 months strongly suggests that we are in the midst of a massive stock market recovery in 2024, probably in the range of 25% or more.
This indicator, called the Zweig Breadth Thrust (ZBT), is one of the rarest and most powerful breadth indicators out there.
It is calculated by taking the 10-day moving average for the percentage of stocks up on the New York Stock Exchange. And it is triggered when this ratio increases from about 40% to about 60% in just 10 days.
Essentially, the Zweig Breadth Thrust is only triggered when the market goes from very oversold to very overbought in less than two weeks. This is a very rare phenomenon. In fact, it's so rare that since World War II, it has only happened 17 times.
And a ZBT signal has been triggered for the 18th time in history.
In the 17 previous instances when this indicator was triggered, stocks rose 6 and 12 months later, 100% of the time. Average future return at six months? Around 15%. Average future return at 12 months? Over 23%.
And, actually, there's even more...
Because this is actually the second Zweig Breadth Thrust this year – and that makes the historical precedent even more optimistic.
We saw a ZBT at the end of March and another one here in November. This means we've witnessed two Zweig breadth thrusts in less than 12 months.
That's super rare.
We've only seen this happen twice in less than 12 months before: 1962 and 1974/75.
After the first ZBT signal in 1962, stocks rose 25% in the following 12 months.
And after the second ZBT signal in 1975, stocks rose 29% in the following 12 months.
In other words, the fact that this is the second ZBT signal in 12 months strongly suggests that we are in for a massive stock market recovery in 2024, probably in the order of 25% or more.
