Core Insights - Successful investing involves finding an edge, exploiting it over multiple trades, and managing risk effectively [1] - Historical indicators can provide insights into potential market bottoms, although past performance does not guarantee future results [2] Zweig Breadth Thrust - The Zweig Breadth Thrust Indicator has been triggered 18 times since World War II, with S&P 500 Index returns never being lower six months or a year after a successful trigger [3][5] - Historical returns following a Zweig Breadth Thrust include an average of 4.8% in one month, 7.8% in three months, 15.3% in six months, and 24.0% in twelve months [3] - The indicator is designed to measure abrupt changes in market breadth after a decline, acting as a significant signal for potential market recovery [6] VIX Spikes - The Volatility Index (VIX) measures short-term volatility expectations and investor fear, with spikes above 50 indicating potential market bottoms [7] - Since 1990, whenever the VIX has spiked above 50, the S&P 500 Index has shown positive performance over the next 1 to 5 years, with 75 instances recorded [8] Stock Selection - Investors are advised to focus on "first mover" stocks that have shown resilience during market downturns, as these are likely to lead in recovery phases [10] - Examples of such stocks include Netflix, Uber Technologies, IonQ, Oklo, and Carvana [10] Conclusion - The historical consistency of the Zweig Breadth Thrust and extreme VIX spikes above 50 provide valuable data for investors to consider when assessing market conditions [11]
Two Market Bottom Signals With Perfect Track Records