The Zweig Breadth Thrust (ZBT) has been playing a large role in stock market analysis over the past few years. According to the theory, the market demonstrates the degree of activity in many stocks and the indication of this activity is given by the breadth thrust. The market breadth thrust signals when at least 90 percent of all stock trades occur in just half of the stocks.
The Zweig Breadth Thrust indicator is a tool used to detect certain trends in the stock market and assess whether or not such trends are likely to occur. It’s used extensively by both beginners and experienced traders alike, as it’s based on the premise that a breadth thrust will occur when an overwhelming amount of buying activity happens in the stocks that make up a particular index.
The ZBT has been used widely in the stock market and among investors for quite some time now. However, some observers are wondering why the indicator may miss something important. As it turns out, the breadth thrust may only be half of the story when it comes to detecting emerging trends in the markets.
The ZBT is a great indicator for detecting when a great many stocks are being affected by the same trend, but it is not always very reliable in terms of detecting which individual stocks are actually causing the trend. As a result, traders may miss out on buying opportunities after they’ve already missed the beginning of a great trend.
For instance, if the ZBT signals when a big breadth thrust is occurring, but doesn’t show which stocks or sectors are actually causing the trend, then traders may be unable to make informed decisions about which stocks to buy. Similarly, if the ZBT is incorrectly showing a breadth thrust when one does not exist, then it may cause traders to purchase stocks that are actually performing poorly.
Therefore, the ZBT is a reliable indicator for detecting a breadth thrust, but it may miss out on some of the details of why and which stocks/sectors are actually causing the trend. As a result, it’s important for traders to supplement the ZBT with other indicator tools if they really want to get the most out of their trades. This may include other momentum-based indicators such as RSI and MACD, or fundamental analysis of stocks or sectors that may be behind the move in the broader market.
In conclusion, the Zweig Breadth Thrust is a great indicator for detecting trends in the stock market and making trades based on them, however it may miss some details of why and which stocks and sectors are creating the signal. As such, traders must supplement the ZBT with other indicators and analysis techniques if they want to confidently purchase stocks or sectors that are likely to benefit from the broad market trend.