In This Article:
Key Points
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The U.S. stock market has performed poorly under President Trump, but it recently triggered a bullish indicator known as a Zweig Breadth Thrust (ZBT).
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The ZBT flashes when the stock market rapidly builds upward momentum, and positive signals have been seen just 16 times since 1957.
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The S&P 500 has always moved higher during the next six months and the next year after positive ZBT signals, with an average 12-month return of 24%.
The S&P 500 (SNPINDEX: ^GSPC) declined 8% during President Trump's first 100 days in office, the index's worst performance under any administration in more than 50 years. In particular, investors are worried about how changes in U.S. trade policy will affect the economy, though the president's remarks about possibly removing Federal Reserve Chair Jerome Powell also caused consternation.
Nevertheless, the U.S. stock market recently triggered a technical indicator known as the Zweig Breadth Thrust (ZBT). Positive ZBT signals have been seen just 16 times since the S&P 500 was created in 1957, and the index has always moved higher during the next six months and the next year. In other words, the ZBT indicator has been 100% accurate.
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Here's what investors should know.
The U.S. stock market just triggered a Zweig Breadth Thrust (ZBT) signal for the 16th time since 1957
The Zweig Breadth Thrust (ZBT) is a technical indicator named for the late fund manager Martin Zweig. A ZBT signal occurs when the percentage of advancing stocks on the New York Stock Exchange (measured as a 10-day moving average) increases from less than 40% to more than 61.5% in 10 trading days. In other words, the indicator flashes following a very abrupt ramp in upward momentum in the stock market.
As mentioned, U.S. stocks have only triggered ZBT signals 16 times since the S&P 500 was created in 1957, and the index has always generated a positive return during the next six months and the next year, according to Carson Investment Research. The average return for each time period is as follows:
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6-month return: 16%
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12-month return: 24%
Importantly, the S&P 500 essentially trades at the same level on April 28 as when the ZBT signal started flashing on April 25. So, the index will advance approximately 16% by October 2025 and 24% by April 2026 if its performance matches the historical average.
The S&P 500 recently jumped more than 1.5% in three straight trading days for the 10th time since 1957
Interestingly, another stock market indicator sounded a bullish alarm on April 24. That was the third straight trading session in which the S&P 500 returned more than 1.5%. The index has only strung together three daily gains exceeding 1.5% on nine occasions since 1957, and it has always generated a positive return in the next year, according to Carson Investment Research.