The Zweig Breadth Thrust (ZBT) is a famous trading indicator. It was created by Marty Zweig to spot the start of new bull markets. The idea is simple: if lots of stocks move from “oversold” to “overbought” in a short time (less than 10 trading days), it could mean strong buying is happening.
A classic ZBT signal happens when the 10-day average of advancing stocks jumps from under 40% to over 61.5%.
Sounds great, right? But it’s not perfect.
Why the Zweig Breadth Thrust Can Be Wrong
- Markets have changed: Today there are more ETFs, algos, and faster trading. This makes the old thresholds less reliable.
- False signals: Sometimes the indicator gives a “buy” signal in weak markets, like during big bear rallies.
- Timing issues: Even after a ZBT signal, the market can dip before really going up.
- Data source problems: The indicator was built for NYSE stocks. If you use the wrong index or include too many non-stocks, it can give wrong signals.
Conclusion
The Zweig Breadth Thrust is powerful, but it’s not magic. Always combine it with other tools like trendlines, volume analysis, and macro news. No single indicator can tell the whole story!
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