Just before the weekend, exclusive news appears on the radar of the SpyStocks research team.
A new spirit in the market, and perhaps a new direction for the indices?
An important technical signal indicates: the gains may just be starting.
After a volatile period in the markets, one of the most reliable and historical technical signals arrives, indicating a positive trend change:
Zweig Breadth Thrust, an index that looks at 'market breadth,' meaning how many stocks participate in the gains, and not just what the large caps are doing.
The original signal is triggered when the percentage of advancing stocks on the New York Stock Exchange rapidly moves from a low level (below 40%) to a high level (above 61.5%) within just 10 days.
This week, we saw the upper part materialize: the percentage crossed the 61.5% threshold. However, the condition of a prior drop below 40% was not met, and therefore the 'classic' signal was not triggered.
But!
An adapted version of the signal was activated, which is based on advanced historical analyses and considers changing conditions. This version has an impressive performance history:
After activation, the S&P 500 index recorded on average: +1.3% within one month, +3.2% in three months, +11% in six months.
All of these are higher than the historical average, and with high consistency.
What does this tell us? Market breadth is improving. More stocks are joining the rally, and it's not just about a few big tech names. When 'everyone participates,' it's usually an indication of a healthier bull market, and one that has legs to continue.
Is this the beginning of a new run for the indices? It's still too early to tell, but it's definitely a signal worth paying attention to. Sometimes, the market whispers to us, the question is whether we are listening.