Breadth Thrust Signals: Short & Medium-Term Market Outlook

The top is in and a healthy pullback has started, but the top came up with an unusual bullish signal.

The top is in but it came with a bullish signal

The anticipated pullback is happening, with the VIX soaring above 13.8. This looks like the beginning of the delayed pullback that didn't occur at the end of June, as seasonality and technicals suggested.

The triggers for a pullback provided in the latest Weekly Compass have been activated, what is interesting is the rare occurrence seen yesterday at this stage of the bull market, a “Breadth Trust”.

"Breadth thrust" refers to a market indicator that assesses the overall health and strength of a market by analyzing the participation of various stocks or assets. It helps traders gauge market participation and the breadth of buying or selling activity beyond just looking at price movements of a few individual securities.

Also in the Weekly Compass published last Saturday, I alerted subscribers that breadth was rapidly improving and the market context was shifting.

In this educational edition I will provide context of what a breadth trust is and what can be expected considering the overbought conditions that the market has been presented; including observations about the so called “Magnificent Seven” that are sneezing and the market is having a cold as it happens when it is moved by few stocks.

This edition provides references for your financial thoughts, this content is an special analysis: