The powerful action in the stock market last week has gained further bullish confirmation as a Zweig Breath Thrust (ZBT) buy signal was generated on November 3rd. This indicator was developed by Martin Zweig and is based on a 10-day EMA of the NYSE Advances / (Advances+ Declines). A signal is generated when the ZBT drops below 0.40 and then rises to above 0.615 in ten days or less.
According to the Carson Group and Ned Davis, past signals have averaged a solid twelve-month gain of 23.3% in 100% of the instances since 1945. The March 31st signal came at a time when many were not convinced that the rally from the start of the year was not just a bear market rally.
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