One of the often-used indicators in order to ascertain the market momentum by technical analysts is breadth thrust index. According to the Zweig model, a bullish signal occurs when the Breadth Thrust indicator moves from below .40 to above .615. You can compute the above-mentioned technical indicator by calculating the amount of progressing/declining issues on an exchange like BSE, are divided by the total number of issues occurring. Thus, 10-day moving average is generated by using the percentage.
The renowned technical analyst and successful investor, Martin Zweig, developed this indicator in order to generate the accurate tips by using this indicator. The technical team of Money Classic Research combines this indicator with other technical indicators to produce the accurate trading tips.
This is a technical indicator that is used to measure the market breadth. As with most breadth measuring technical indicators, the Breadth Thrust indicator is based on the exchange’s advance and declining issues data.
The factors that put aside the Breadth Thrust indicator is that it is used as a timing indicator and is used as a long term trading indicator. This indicator can signal the bull markets or periods of renewed bullish momentum with a good level of accuracy.
It is also known as the Zweig Breadth indicator, which was named after the namesake, Marty Zweig, one of the veterans on Wall Street. Zweig also authored a book, “Winning on Wall Street.” Zweig was known for combining both fundamentals and technical analysis in his analysis of the markets and the Zweig Breadth Thrust indicator is one of his famous works.
As per the founder of indicator and eventually the principle that determined the Breadth Thrust indicator was that if the market breadth shows a positive reversal within a short span of time, it signaled the start of a new bull market.
Signal of indicator was based upon analyzing the 10-period exponential moving average based on the ratio of the NYSE advancing and declining issues. It was therefore said to be oversold below 40 and overbought above 61.5.
When the 10-day exponential moving average moved from 40 to 61.5 in a period of 10 days then it was the breadth thrust indicating a potential bull market in the making.
This indicator is widely watched and is commonly referred to on the financial news media as well. Signals generated from this indicator are widely reported as the same as a 50 and 200 period moving averages signaling the golden or the death cross.
Generally, the Breadth Thrust indicator oscillates between the fixed values of 40 and 61.5. it is observed that if the Breadth Thrust indicator reaches the oversold level (40) you can expect to see a lot of chatter and activity in the markets as it signals a possible turning point in the markets. It is not hard to miss the turning points in the markets signaled by the Zweig Breadth Thrust indicator. Ask Money Classic Research to help you in trading and getting accurate stock future tips.