Education / Indicators / BREADTH THRUST

The Breadth Thrust indicator is a market momentum indicator. It was developed by Dr. Martin Zweig. Dr. Martin Zweig developed this market momentum indicator that illustrates a thrust when, during a 10 day period, the average number of issues that are advancing rises from below 40% to above 61.5%. This indicates that the market has gone rapidly from an oversold condition to one of strength, but is not yet overbought. Breadth thrust is a ratio of moving averages calculated by dividing a 10-day exponential moving average of the number of advancing issues, by the number of advancing plus declining issues.

Calculation

The Breadth Thrust is a 10-day simple moving average of the following:

The value of the resulting ratio cannot be greater than 1 or less than zero. The breadth thrust indicator creates a percentage value that moves like a traditional oscillator from 1 to 100 (or .01 to 1.00). As with a stochastic or RSI indicator, overbought and oversold levels are interpreted to be around the extremes. Zweig asserts that most bull markets begin with a Breadth Thrust. He maintains that there have only been fourteen Breadth Thrusts in the S&P 500 since 1945 with an average resulting gain of 24.6% in an average time-frame of eleven months