Yesterday we said, “The week of December 19 tested the week of December 12 low on at least 10% lighter volume and then closed above the December 12 low generating a bullish signal. If a market can’t take out the previous low on higher volume it will reverse and attempt to take out the previous high; in the current situation, this would give a target to the week of December 12 high near 410 on the SPY. The SPY traded sideways for over two weeks going into last Thursday and the Bollinger Bands narrowed suggesting a large move is about to begin. The large up move on Friday on increased volume suggests the large move has begun.” Employment numbers come out Thursday and may add energy to the market. Didn’t point it out in my market letter but January 6 was a full moon and the day SPY broke out of the sideways trading range that began December 19. 

The bottom window is the Zweig Breadth Thrust noted with blue and red lines. A Zweig Breadth Thrust is when the NYSE Advance/NYSE total reaches below 40 and then rallies to above .60 in 10 days. The Zweig Thrust usually shows up near a bottom in the market and gives credit that a bottom is forming and helps to confirm an intermediate rally is beginning. There were a few Zweig Thrusts coming off the March 2020 low note on the chart. We have two Zweig Thrusts so far in the current market noted on the chart above.

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