Just over two months ago the Zweig Breath Thrust (ZBT) generated a rare buy signal. In the interim I have enjoyed the positive feedback given the stock market’s impressive gain. After the past fourteen signals since 1950 the S&P 500 was always higher 12 months later. Some were curious about how the market traded after the prior ZBT buy signal in January 2019, so let’s look at the charts.
The S&P 500 closed at 2596 in 2019, line a, as the ZBT turned bullish. The SPX had made low two weeks earlier and rallied for 19 weeks before peaking the week of May 3rd and forming a doji, point b. The six-week decline had a classic corrective pattern that resulted in a decline of 7.6% from high to low.
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