At the end of October, investor sentiment was at a low. The S&P 500 had finished eight of the previous nine trading days in the red up until Friday, October 27th, before unexpectedly positive inflation data led to a sudden change in sentiment.

V-Formation on Wall Street The overdue price recovery that followed was equally unusual. It was followed by a dynamic increase. Up to yesterday, the S&P 500 recorded gains in ten of the past twelve trading days and has already risen by almost 10% compared to its correction low at the end of October.

This has formed a small V-formation. After a steep decline, there was an abrupt turn, followed by an equally strong increase. Similar to the corona crash, but in a much shorter time frame.

Rare and strong buy signal on Wall Street This extremely rapid change in sentiment has resulted in a rare and strong buy signal on Wall Street in New York. This signal was delivered by the so-called „Zweig Breath Thrust Indicator“. This market breadth indicator was developed in the 1970s by the late American Martin Zweig, a technical analyst.

This indicator sets the number of stocks on the New York Stock Exchange that have risen in the past ten days in relation to those that have fallen. A sliding 10-day average is then given as a percentage.

A buy signal is generated when the indicator has risen from less than 40% to more than 61.5% within just ten trading days, i.e. when the market sentiment has turned very quickly and dynamically.

Source: Tradingview

100% hit rate The special thing about it: Such buy signals are extremely rare. Since 1945, this indicator has only delivered 17 buy signals. And now hold on – there was not a single false signal. Every time this indicator sounded, the S&P 500 rose afterwards and improved by an average of around 25% within eleven months of a signal. Of course, this is not a guarantee that it will happen the same way this time. However, the probability of further medium-term price increases is high. This is also supported by the fact that the S&P 500 recently successfully tested its 200-day line and turned dynamically upwards from here.