Fundstrat’s head of research Tom Lee says there are four major signs that support the idea that the stock market is in the middle of a bullish reversal.
In a new video update on the YouTube channel of Fundstrat, Lee starts by noting that a Zweig -width thrust was activated on the S&P 500 index on 24 April.
The Zweig-Vrijpsracht is an indicator trying to detect the early stages of a potential bull run by dividing the 10-day advancing average of the number of advancing shares through the total number of shares.
Lee says that Zweig’s thrust has almost always indicated the threatening rallies of the shares.
“That has happened 11 times since 1978 and in particular, a month, six months and 12 months later, stock markets are always up. And this was activated on 24 April.”
Secondly, Lee notes that the corrected spreads (OAS) with high yields 50% of the broadening on 23 April. A shrinking of credit spreads the difference in yield between risky junk bonds and “risk-free” government bonds usually on stability and the appetite of healthy investors.
“That is a positive development because we are now declining from a recession risk. If the spreads of high yield of 500 had gone [basis points] Up to 1,000 a recession was guaranteed, but instead, almost all broaden it is reversed to equally levels before 2 April. “
Lee also says that the S&P 500 saw two consecutive days where 90% of the S&P 500 shares gathered, an event that has led historically to further upside down.
“That means that shares, within a few days apart, had posted two days where the advancing profits were 90% or more. As you can see here, three times since 1979, shares three, six and 12 months later are higher.”
Finally, the investor of the Volatility Index (VIX) – a measure of market volatility based on data from the Chicago Board Options Exchange – closes below the 31 -level level.
According to Lee, the VIX now signals a drop in future volatility and probably strength for shares.
https://www.youtube.com/watch?v=O96TRFVC0H0
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