The S&P 500 has rallied impressively since hitting lows on April 9.
Stocks set for weekly gains as the U.S. seeks better trade terms with China and India. @KristenScholer has more in the Market Update. pic.twitter.com/zXKI5XoUSV
— NYSE 🏛 (@NYSE) April 25, 2025
Most stocks have participated in the move higher, including technology stocks that were hit hard in the early-April sell-off following worse-than-expected tariffs announced by President Trump on April 2. The S&P 500 tumbled 12% through April 8, but Trump paused most reciprocal tariffs on April 9 for 90 days to negotiate deals.
This fueled a 10% surge in the S&P 500, despite lingering economic risks. On Thursday, April 24, a rare and bullish signal called the Zweig Breadth Thrust flashed. Developed by legendary investor Martin Zweig, this signal has historically triggered higher stock prices within a year.
The biggest sustained move in financial markets, post April 2, is in the dollar, which remains very lows (BBDXY).
10-year yield is still higher than it was, but it's stabilized quite a bit.
And of course stocks have bounced back impressively. pic.twitter.com/kwfhi8obY5
— Joe Weisenthal (@TheStalwart) April 24, 2025
The Zweig Breadth Thrust requires a swift shift from widespread selling to buying within 10 days. It divides the number of advancing NYSE stocks by the total number of advancing and declining stocks. A buy signal triggers when the 10-day moving average rises above 61.5% after being below 40% within two weeks.
I know the Zweig Breadth Thrust (ZBT) got all the attention last week, but the fact the NYSE had six days with at least 70% advancers over a two week period really had my attention as well.
This simply doesn't happen in bear markets. pic.twitter.com/WpygSBRuPh
— Ryan Detrick, CMT (@RyanDetrick) April 26, 2025
Bullish signal for S&P 500
This is only the 20th Zweig Breadth Thrust since 1945. The last one was in November 2023.
There was a rare Zweig Breadth Thrust this week, but that wasn't the only good news.
I take a look at some great signs for the bulls in our latest @CarsonResearch blog!https://t.co/cQJtFL9zVY
— Ryan Detrick, CMT (@RyanDetrick) April 25, 2025
The S&P 500 has shown gains 100% of the time one year after such a signal, with an average return exceeding 23%. Historically, the S&P 500 has delivered robust returns following a Zweig Breadth Thrust. The average return over one, three, and six months post-signal are 5%, 8%, and 15%, respectively, with high success rates.
However, a Zweig Breadth Thrust doesn’t guarantee immediate or uninterrupted gains. In 2023, despite two such signals, the market corrected by 11% over several months. So while this suggests significant gains over the coming year, it doesn’t necessarily mean the market has bottomed.
Looking ahead, while short-term fluctuations are likely, the historical performance following a Zweig Breadth Thrust provides a positive outlook for long-term investors. Despite current challenges like sticky inflation and a weakening job market, the long-term outlook remains encouraging for those with horizons beyond six months to a year.
