Market Indicator Signals Potential Upside for Wall Street
A reliable and rare market indicator suggests that the good times on Wall Street may just be beginning. The Zweig Breadth Thrust (ZBT) indicator recently flashed a buy signal, a phenomenon that has occurred only 18 times since 1945, according to Ryan Detrick, chief market strategist at Carson Group. Historical data shows that when this signal occurs, the S&P 500 tends to average a 23.3% gain over the following 12 months, with a 100% success rate.
The Zweig Breadth Thrust Indicator
Developed by legendary investor Marty Zweig, the ZBT indicator is used to gauge market momentum, particularly the start of a potential upward move. The signal is triggered when the ZBT rises from less than 0.4 to more than 0.615 within a span of 10 days. It is calculated by determining the ratio of advancing New York Stock Exchange-listed names to the total number of rising and declining issues, and then finding the 10-day exponential moving average of that ratio.
Market Implications and Recent Performance
The buy signal from the ZBT indicator coincided with the S&P 500 wrapping up its largest weekly gain of the year, surging 5.9% and marking its biggest one-week rally since November 2022. This momentum followed the Federal Reserve hinting that it may halt its rate hikes. Detrick believes that the Fed's stance, along with the economy normalizing rather than heading straight into a recession, are crucial factors. He suggests that the ZBT signal indicates the potential for significant buying pressure and the likelihood of an end-of-year rally.
Predictions for the S&P 500
Detrick predicts that the S&P 500 could reach between 4,600 and 4,700 by the end of 2023. This implies an upside of 5.5% to 7.8% from Friday's close, and a year-end increase of 19.8% to 22.4% for the benchmark index. However, it is important to note that the Zweig Breadth Thrust is just one indicator, and the market can be influenced by various factors before the year concludes.
In conclusion, the recent buy signal from the Zweig Breadth Thrust indicator suggests potential upside for Wall Street. While it is an encouraging sign, investors should consider multiple indicators and remain mindful of the multitude of factors that can impact the market's performance in the coming months.
Wall Street's Rare Signal: An Opportunity for New Businesses?
The recent buy signal from the Zweig Breadth Thrust (ZBT) indicator suggests a potential upside for Wall Street. This rare market indicator, which has only flashed 18 times since 1945, is hinting at the possibility of good times ahead. Historically, this signal has led to an average 23.3% gain for the S&P 500 over the following 12 months.
Understanding the ZBT Indicator
The ZBT indicator, developed by investor Marty Zweig, measures market momentum. It's triggered when the ratio of advancing New York Stock Exchange-listed names to the total number of rising and declining issues, rises significantly within a span of 10 days. This signal often indicates the start of a potential upward market move.
Implications for New Businesses
For new businesses, this could be a favorable time to enter the market or seek investment. The recent buy signal coincided with the S&P 500's largest weekly gain of the year, a positive sign for potential investors. Furthermore, the Federal Reserve's hint at halting rate hikes could lead to a more stable economic environment, potentially beneficial for startups.
Market Predictions and Considerations
Ryan Detrick, chief market strategist at Carson Group, predicts the S&P 500 could reach between 4,600 and 4,700 by the end of 2023. This implies an upside of 5.5% to 7.8% from Friday's close. However, while the ZBT indicator is promising, it's important for new businesses to consider multiple indicators and remain aware of various factors that could impact the market's performance in the coming months.
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