A "Breadth Thrust" occurs when, during a 10-day period, the Breadth Thrust indicator rises from below 40% to above 61.5%. A "Thrust" indicates that the stock market has rapidly changed from an oversold condition to one of strength, but has not yet become overbought. According to Dr. Zweig, there have only been fourteen Breadth Thrusts since 1945. The average gain following these fourteen Thrusts was 24.6% in an average time-frame of eleven months. Dr. Zweig also points out that most bull markets begin with a Breadth Thrust.
According to RSInvestor Market Research the Zweig Breadth Thrust triggers very infrequently. The idea behind the indicator is that stocks turn up sharply from oversold, but are not yet overbought. Dr. Zweig found that anytime the value goes from below 40 to above 60.5 within 10 days, the likelihood of a new bull market is quite high. It doesn't happen very often, (only 15 times since 1945) but when it does, he claims that the average return over the next 11 months is 24.6%.
The calculation are as follows:
- Find the number of advancing stocks
- Find the number of declining stocks
- Calculate the 10-day, exponential moving average (MA) of each
- Zweig Breadth Thrust = (MA of Advancing) / (MA of Advancing + MA of Declining)