There are a number of market breadth indicators that are close to “officially” completing bullish breadth thrusts. Initial setups for breadth thrusts are much more typical after big pullbacks or corrections, though, not with prices near all-time highs, notes John Eade, president of Argus Research.
We use the word “official” as some indicators, such as the Zweig Breadth Thrust (ZBT), seem a bit arbitrary based on their requirements. The ZBT is named for its founder, the famous stock investor Martin Zweig (1942-2013). As it was designed, ZBT signals the start of a bull market. But in this case, we are already in a bull market.
The ZBT triggers when the 10-day exponential moving average of NYSE advancing issues divided by advancers plus decliners goes from below 0.40 to over 0.615 within 10 trading days.
According to Zweig, the concept of thrust is based on the principle that the sudden change of money in investment markets elevates stocks and signals increased liquidity. The ZBT and most other breadth thrust indicators show when breadth goes from poor, to very good, to great – all in a condensed period of time. One could also call this a “character change” in the market.
On Nov. 20, ZBT fell to 0.38 and then rose to a high of 0.58 on Nov. 28. This “unofficial” thrust, according to the ZBT parameters, took place in only five days. On Thursday, the reading closed at 0.54, which was day nine.
So, there’s no official ZBT. But these are arbitrary parameters for the indicator. We believe “close to the cup” is good enough based on the current price locations.
