One of the rarest and most reliable technical indicators in market history triggered last week… It’s called the Zweig Breadth Thrust. And if history is any guide, it can lead to some great profits for investors! Here’s why…

The mother of all “buy-the-dip” signals…?

Developed by one of the most respected market strategists of the 20th century – Martin Zweig –the Zweig Breadth Thrust triggers the moment when bearish sentiment in the market evaporates – signalling a powerful bullish reversal is underway.

Here’s how the Zweig breadth Thrust works:

It tracks the 10-day moving average of advancing stocks on the NYSE.

When that average surges from below 40% to above 61.5% in 10 days or fewer, the signal fires.

This rapid transformation signifies a dramatic change in market sentiment, moving from a state of widespread pessimism to huge buying activity sending share prices higher.

What’s so important about the Zweig breadth Thrust indicator?

Well, since World War II, the Zweig Breadth Thrust has triggered only 18 times.

After each time,

• The S&P500 was higher six months later 100% of the time.

• The S&P500 was higher 12 months later 100% of the time – with an average return of 25%.

The last time it triggered was in March 2023 just as the AI Boom heated up. And guess what happened over the next 12 months?

The S&P500 delivered a 26.8% return!

Now. since the Zweig Breadth Thrust triggered last week, the S&P500 is up roughly 4%.

So far so good.

However, remember that the global economy isn’t in the same position as it was in 2023. Today, tariffs are driving uncertainty in the markets. More importantly, they threaten to disrupt trade and reignite inflation, which ultimately leads to lower economic growth.

So, while the Zweig Breadth Thrust is very reliable with predicting future returns, you also need to focus on company fundamentals to separate the long-term winners from the losers.

Earnings season in the US just kicked off and it’s been a strong start so far – specifically AI plays such as Alphabet, Taiwan Semiconductors, Lam Research, Vertiv and ServiceNow.

Of course, there are still hundreds of more companies to report. But this earnings season is probably one of the most important ones in a long time. After all, it’s the first earning seasons that’ll factor in tariffs and trade disruptions.

It’s here where I’ll be looking for “buy-the-dip” opportunities for South African Investor to take advantage of the Zweig Breadth Thrust signal.