The Little-Known Indicator That Signals a New Bull is Here

This week, all eyes are on the Federal Reserve.

After the longest winning streak for the S&P 500 in two decades, there are questions abound whether this rally is real. And if Jerome Powell is going to lend a helping or hurting hand.

But a little-known indicator is already telling us the new bull is here.

You see, it’s only been triggered 16 times since 1950.

But each time its occurred, stocks were sent soaring.

It’s one of the most bullish signals investors can ever hope for… with a 100% success rate.

And it just flashed “buy” on April 25.

Thumb’s Up from a Wall Street Icon

Of all the legendary characters on Wall Street, Martin Zweig is an icon of his own.

He was known for being eccentric and living lavishly. He owned Michael Jordan’s rookie jersey, Clint Eastwood’s gun from “Dirty Harry,” and Buddy Holly’s guitar. And lived in the most expensive single-family home in America.

But for all pricey pop culture memorabilia and extravagances, at his core he was exceptionally good at what he did.

The Zweig Forecast newsletter returned 15.9% per year for 15 years starting in the 1970s.

He ran mutual funds and hedge funds.

And he penned the seminal book, Winning on Wall Street.

Zweig was one of the most iconic American growth and momentum investors. And he designed indicators to help him recognize major market turns.

One of these is the Zweig Breadth Thrust (ZBT).

This is a technical signal that occurs when the 10-day moving average of the percentage of advancing stocks jumps from below 40% to above 61.5% within a 10-trading day window.

It seems overly complicated. But the goal of the ZBT is simple and straightforward: identifying rapid changes in momentum.

This is the signal that flashed on April 25.

It has a storied history of success, just like its creator.

But I’ll also explain why it was triggered…

A Perfect 75 Years

Since 1950, the ZBT has correctly identified the beginning of a new bull run in equities every single time without fail.

The last time this signal was seen was November 3, 2023.

One month later, the S&P 500 had gained 4.79%.

One year later, the index was up 32.7%.

On March 31, 2023, the signal was triggered. Six months later the S&P was up 4.36%. And one year later, the index had gained 26.82%.

Over the past 75 years, the average return on the S&P six months after the ZBT signal appears is 16.35%.

One year later, the average gain is 23.78%.

Now, let’s remember what happened in these previous two instances and compare it to our current market.

From September 1 to October 27, 2023, the S&P shed 8.7% of its value.

Investors were worried about earnings season, and we had the bloody, horrific attack from Hamas on Israel citizens on October 7. There were fears this conflict would erupt into something larger. Then, suddenly on Monday, October 30 – a de-escalation appeared. And tech earnings were stronger than once thought.

By November 3, the S&P had shot up 5.95%. The ZBT was triggered.

Back in February and March 2023, the FTX crypto scandal caused SVB Financial and Silicon Valley Bank to collapse, triggering the regional bank crisis of 2023. And soaring inflation added to investor panic.

The S&P tumbled 7.5% from February 2 to March 13.

Then, inflation came in cooler than expected and the U.S. government stepped in to prevent anymore failures.

U.S. equities shot up 6.5% by the end of March.

Now, let’s talk about this year…

U.S. equities were in freefall from their all-time highs in February to April 9, tumbling into bear markets. All of the damage was caused by the threat of tariffs, and an escalation by the Trump Administration. Investors were apocalyptic about the outlook for stocks.

But then what happened?

Trump announced a 90-day pause. He then started walking back tariffs. And cool heads prevailed.

All the anxiety has been released. And the S&P has rocketed higher, closing in on its longest winning streak in 20 years.

This isn’t technical mumbo-jumbo… the ZBT is triggered for very real fundamental reasons. Investors are overwhelmed by fear – a sudden exogenous crisis appears. But then, just as suddenly, that fear is dissipated by some intervention.

A switch is flipped. Investors buy the dip in a frenzy.

The ZBT signal appears.

Keep in mind that 16 times this signal has flashed throughout the history of the S&P, the index has been up 100% of the time six months and one year later.

That means, the ZBT bull signal is projecting a 16% gain on the S&P by October. And we should be roughly 24% higher by April 2026.

Surging Sentiment

You can feel it…

The mood has shifted.

Pull up any sentiment indicator.

The headlines are no longer terrorized by tariff talk. The focus is back on what it should be: companies and their earnings.

Over the past several weeks, I’ve detailed here the bullish signals the markets are giving. The unmistakable evidence that equities are going to be charging higher. And why investors who are sitting on the sidelines will be left behind.

But don’t worry, if you haven’t acted, you’re not too late.

In fact, we’re still in the preliminary stages of the next bull run.

That means, if you’ve been sitting on the sidelines or haven’t jumped back in yet, there’s no reason to wait any longer.

Running with the new bull,
Matthew

P.S. It’s been a hectic few weeks for me, traveling and working on various projects. But I’m excited to announce that you can also find me every Tuesday and Thursday in Eagle Financial Publishing’s Eye on the Market. And I’m also a contributor to Legacy Wealth HQ.