Are Positive Signals Emerging in Stock Markets?
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Recent insights from Tom Lee, research head at Fundstrat, indicate that four significant indicators may herald a favorable shift in the stock market. In his latest update, Lee pointed out the Zweig breadth thrust signal, which was registered on April 24 in the S&P 500 index. Due to the close relationship between cryptocurrencies and equities, this analysis holds substantial importance for individuals engaged in the market. What is the Zweig Breadth Thrust Indicator?Have Credit Spreads Narrowed Significantly? What is the Zweig Breadth Thrust Indicator? The Zweig breadth thrust serves as a measure that highlights the onset of an upward trend by comparing the moving average of advancing stocks to the total number of stocks. Lee confirmed that this indicator has historically pointed to market increases on 11 occasions since 1978, showing strong correlations with upward movements one, six, and twelve months afterward. Tom Lee: “This has happened more than 11 times since 1978; the markets have always moved upward afterward.” Have Credit Spreads Narrowed Significantly? Yes, Lee noted a notable contraction in option-adjusted spreads within the high-yield bond market as of April 23. A reduction in credit spreads signals a decreased yield gap between high-risk bonds and government securities, suggesting diminished recession fears and a revived appetite for risk among market players. Tom Lee: “The narrowing of high-yield spreads back to previous levels is seen as a positive development.” Lee also pointed out that over a recent two-day span, more than 90% of the stocks in the S&P 500 index recorded gains, indicating a potential for further upward momentum. Historical patterns suggest that such occurrences often lead to positive returns over subsequent three, six, and twelve-month periods. Tom Lee: “This indicates that stocks periodically show significant increases.” Further supporting this outlook, the VIX index’s drop below 31 hints at a…
Filed under: News - @ April 27, 2025 11:11 pm