Bad breadth? Not so fast - Zweig Indicator Triggered Historically Rare & Positive

Many strategists on TV have voiced bearish opinions with an argument that only a few stocks are rising and causing the averages to gain in 2023. Stocks like AAPL and Microsoft are causing oversized index gains. While mathematically it is true that a few large tech stocks that are weighted heavily in the S&P index are overcontributing to the index gains this year, this is always true when there are a few big companies making an index top heavy. When commodities and energy were big weights in the indexes into the GFC, names like XOM and CVX overcontributed.

I have to disagree with their premise that the market has “bad breadth”. In fact on 3/31, just as the first quarter ended, an incredibly rare but bullish stock market indicator flashed a buy signal for the first time since early 2019. This indicator wasn’t even triggered during the massive 2h2020 and 2021 rally that stocks had. According to Merrill Lynch, on 3/31 the NYSE triggered only its 34th “Zweig breadth thrust” since 1930, over 90 years and only the 14th time since 1950! We talked about this indicator back in the second quarter of 2020 as it was close to triggering but it didn’t.

 

#stocktalk #stockmarketnews #retirementlife

 

Stock Talk is a weekly vlog/podcast dedicated to discussing the Oak Harvest Financial Group Investment Team's perspective on what's happening in the market. Hosted by Chief Investment Officer Chris Perras, each episode brings you our views on stocks, the market, and the economy — with a little education thrown in for good measure. Listen each week and help stay connected to your money!

 

News or Noise is a vlog/podcast that looks at current topics and helps you decide if they are newsworthy for your investments. Should you be concerned? Or, should you tune out the noise and not worry? These are going to be quick, casual, opinion pieces, and while we will use data to support our view, we will most likely be wrong in our interpretations, at least some of the time. However, we are looking to practice what we preach, and to help investors to rationally and critically analyze emotion-laden stories.

 

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About Chris Perras, CFA®, CLU®, ChFC®, Chief Investment Officer

 

As CIO, Chris is the lead investment strategist and director of research at Oak Harvest Financial Group. Chris develops the firm's core market outlook, putting his decades of experience and expertise to work for our clients. He hosts Oak Harvest's podcast, "Stock Talk," available on the website with new episodes each week.

He completed his undergraduate studies at Georgia Tech, and went on to obtain an MBA from the Harvard Business School. Driven by a desire to maximize his knowledge and skill set, he acquired a plethora of financial planning and investment management qualifications, becoming a Chartered Life Underwriter (CLU®), a Chartered Financial Consultant (ChFC®), and a Chartered Financial Analyst (CFA®).

 

Important disclosures: Content of Oak Harvest podcasts expresses the views of the speaker and is for informational purposes only. Oak Harvest believes that any data, articles, or information cited are reliable at the time of creation, but does not warrant any information contained herein to be correct, complete, accurate, or timely. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you — and nothing in this podcast constitutes personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment and your investment results may differ when compared to an index. Any specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss, and past performance is not indicative of future results.