A Key Breadth Thrust Signal Has Triggered | 2 Money Making Trade Setups
Signs Continue To Build For A Major Rally
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One of the most reliable breadth thrust indicators, the Zweig thrust, triggered last Thursday, April 24th.
This indicator measures the NYSE advancing issues as a % of advancing + declining issues, and is smoothed by a 10-day EMA (exponential moving average).
An alert is triggered when the indicator cycles from below 40% to above 61.5% in ten trading sessions or fewer.
When the Zweig thrust signal occurs during a downtrend, as we are seeing now, it often indicates that the broader trend is starting to reverse.
Historically, stocks have continued seeing short-term volatility following this signal, but have systematically been higher 6-12 months later (similar to the data we also covered in an earlier article titled “A Contrarian bet” found here).
Below the table shows the 1 month, 2 months, 3 months, 4 months, 5 months, 6 months and 12 months statistics following this signal.
Multiple time horizons have recorded impressive win streaks, with the 6-month window leading the way, boasting 20 uninterrupted successful signals since 1938.
Interestingly, the 6-month time frame being the most constructive is also what our last earlier article titled “A Contrarian bet” (found here) pointed to.
However, it’s important to remember that short-term volatility (1-2 months) is still not off the table here, like the 2015-16 growth scare signal we show below.
Even the Nasdaq Zweig thrust signal triggered last Thursday.
Looking at the statistics for it, we can see that here too the first 2 months can be volatile, but from the 2 month to 1 year mark the returns and win rate gets quite constructive.
In fact, the 1 year time horizon has shown to have a 100% win rate (success rate) since 1985, with an average return of 26.74% (median return of 25.16%) - very promising numbers.
In the next section, we’ll cover:
A signal to understand the risk-on/risk-off aspect of the market and where we’re heading right now (this indicator has a fantastic track record)
A look at what the transportation sector is saying for the broader stock market, given how confirmation from transportation is key for a rally
2 very attractive MONEY MAKING TRADE SETUPS, with the first one having the potential for +115% return and the second one with the potential for +175% return!
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