A rare bullish stock market indicator just flashed, suggesting the S&P 500 rally will continue. The Whaley Breadth Thrust Indicator, which has a 100% success rate one year out, has been triggered due to a sharp rise in stock participation.
The indicator, which has only been triggered 15 times since the S&P 500’s inception in 1950, is a signal that the current 61% bull market rally that started in October 2022 has more room to run. According to technical analyst Grant Hawkridge of AllStarCharts, the indicator is triggered when the number of five-day advancing stocks in the market exceeds the number of five-day declining stocks by about 3-to-1.
The recent trigger of the Whaley Breadth Thrust indicator is significant as it has historically resulted in an average one-year return of 23% for the S&P 500, with an average six-month gain of 17.4%. This suggests that the S&P 500 could potentially reach nearly 7,000 in the near future.
Market strategists like Ryan Detrick of Carson Group see this as a strong signal that stocks are poised to move higher. Despite the unusual timing of the indicator triggering near all-time highs, it indicates that many stocks have not fully participated in the recent rally.
The last time the Whaley Breadth Thrust signal triggered was in November 3, and since then, stocks have surged nearly 20%. Previous triggers of the indicator have occurred in June 2020, January 2019, and September 2009, all resulting in significant market gains.
Overall, the flashing of this rare bullish indicator suggests that the current S&P 500 rally is likely to continue, providing investors with confidence in the market’s upward trajectory.
