13 replies to this topic

[inamosa]

Far be it from me, a market novice relative to Tom McClellan, to correct a legend like Tom (if you're not sure what I'm referring to, see his latest article). However, he is far from being the only one who has erred on the definition of the Zweig Breadth Thrust, and someone needs to show what Zweig really said and not what everyone is trying to ascribe to him.

Many of the definitions you find online of the Zweig Breadth Thrust I have not seen anyone trace back to any Zweig's writings. This stuff about when a 10-day EMA of (advancers / total issues) goes from 40 to 61.5 being a Zweig Breadth Thrust, for example, I call B_S - until I actually see someone trace it back to Zweig's writings, and I have yet to see that happen.


How did Zweig actually define the Zweig Breadth Thrust according to his very own writings, and not what people have ascribed to him without reference?
I've gone ahead and taken the time to scan a couple of pages from his 1986 publication, "Winning on Wall Street":


In other words, Zweig defined a Zweig Breadth Thrust as a 10-day period where the total number of advancers outnumber the total number of decliners by a 2:1 ratio. This can also be defined as a 10-day period where ADT10 > 66.6667.

*ADT10 = (Sum of Advancers Over Past 10 Days) / (Sum of Advancers Over Past 10 Days + Sum of Decliners Over Past 10 Days)

What is the Real History of Zweig Breadth Thrusts?
The Zweig Breadth Thrust was originally applied by Zweig to the NYSE Composite. Back then, the NYSE Composite was not polluted with so many non-operating components (as it has been over the past 10 or so years) and almost entirely (if not entirely) consisted of common stocks (sort of like the S&P 1500 of today). Here is the history of Zweig thrusts on the NYSE Composite based on a report from the MTA that I have:



Sorry, I don't have data for Zweig Breadth Thrusts on the NYSE Composite past 2009.

[I no longer keep track of NYSE historical data and have focused on SPX historical data instead, since the latter by policy should never include non-operating components. Backtesting has revealed that breadth thrusts on the SPX of all kinds (not just Zweig's) are just as useful and have just as good performance (with negligible positive or negative differences on occasion) as breadth thrusts of the past on the NYSE Composite (and breadth thrusts on the SPX are in fact more useful, as compared to the NYSE Composite, I would argue, since the SPX has so many large companies and they happen to be the real market movers due to the major indices being market cap weighted - whereas the NYSE Composite still has many more small companies than medium and large companies combined, never mind the pollution today caused by non-operating components which are mainly interest-rate sensitive, like bond funds.]

Just How Important is the ADT10 That Zweig Kept Track Of?

You tell me:

Edited by alysomji, 02 July 2011 - 02:20 AM.

[colion]

The description in "green" does not indicate that the formulation is Zweig's Breath Thrust. Is there something else in the book that applies that name to the "green" section?

[inamosa]

The description in "green" does not indicate that the formulation is Zweig's Breath Thrust. Is there something else in the book that applies that name to the "green" section?

It is the Zweig Breadth Thrust. Zweig himself did not call it that but rather called it the "Super A/D Ratio," as can be seen in a later part of the book. Since the "Super A/D Ratio" (which he also called simply the "A/D Indicator") is really just a breadth extreme or breadth thrust defined by Zweig, it came to be referred to by technicians of the time as simply the "Zweig Breadth Thrust."

Zweig considered the "Super A/D Ratio" to be one of two ingredients to look for to herald a bull market, with the second measure being the "Super-Bullish Fed Indicator." More detail can be found in the book on the latter. He also said that new legs within a bull market can also result from the trigger of the "Super A/D Ratio."

Edited by alysomji, 02 July 2011 - 07:11 AM.

[Islander]

http://www.mcoscilla...adth_Thrust.gif


Just so we can read the MCO post.

Sort of a spotty record ?

[colion]

The description in "green" does not indicate that the formulation is Zweig's Breath Thrust. Is there something else in the book that applies that name to the "green" section?

It is the Zweig Breadth Thrust. Zweig himself did not call it that but rather called it the "Super A/D Ratio," as can be seen in a later part of the book. Since the "Super A/D Ratio" (which he also called simply the "A/D Indicator") is really just a breadth extreme or breadth thrust defined by Zweig, it came to be referred to by technicians of the time as simply the "Zweig Breadth Thrust."

Zweig considered the "Super A/D Ratio" to be one of two ingredients to look for to herald a bull market, with the second measure being the "Super-Bullish Fed Indicator." More detail can be found in the book on the latter. He also said that new legs within a bull market can also result from the trigger of the "Super A/D Ratio."

If Zweig did not call it the ZBT how do you know that the description in the book is the ZBT? If Zweig did not create the name ZBT who did?

[inamosa]

The description in "green" does not indicate that the formulation is Zweig's Breath Thrust. Is there something else in the book that applies that name to the "green" section?

It is the Zweig Breadth Thrust. Zweig himself did not call it that but rather called it the "Super A/D Ratio," as can be seen in a later part of the book. Since the "Super A/D Ratio" (which he also called simply the "A/D Indicator") is really just a breadth extreme or breadth thrust defined by Zweig, it came to be referred to by technicians of the time as simply the "Zweig Breadth Thrust."

Zweig considered the "Super A/D Ratio" to be one of two ingredients to look for to herald a bull market, with the second measure being the "Super-Bullish Fed Indicator." More detail can be found in the book on the latter. He also said that new legs within a bull market can also result from the trigger of the "Super A/D Ratio."

If Zweig did not call it the ZBT how do you know that the description in the book is the ZBT? If Zweig did not create the name ZBT who did?

I'll be honest and frank: your question does not matter in light of the following facts...

1. There are multiple definitions people have given for the Zweig Breadth Thrust over the past several years.
2. The two most common definitions for the Zweig Breadth Thrust are the one I gave in the opening post of this thread and the one Tom McClellan gave in his latest article.
3. Out of all the definitions of the Zweig Breadth Thrust out there, the only that can be traced to any of Zweig's writings and the only one that results in the 3-, 6-, and 12-month performance that would be expected of a multi-sigma move in breadth, is the definition I gave in the opening post of this thread.

There are a couple of other technicians I respect who have also looked into this, both of whom are big fans of Zweig and one of whom once won a prestigious Charles H. Dow Award from the MTA, and they both agreed on these facts.

[inamosa]

http://www.mcoscilla...adth_Thrust.gif


Just so we can read the MCO post.

Sort of a spotty record ?

I already linked to Tom's full article in the opening post of this thread, which is where your graphic came from:
http://www.mcoscilla..._thrust_signal/

And, yes, Islander, I would have to agree that this definition of the Zweig Breadth Thrust that Tom (and a huge number of online people) give that cannot be sourced to any of Zweig's writings based on my research and the research of a couple of other technicians I respect does indeed have a spotty record (at least when applied to NYSE historical data...but I have also tested it on SPX historical data and the results are not what they should be for a multi-sigma move in breadth).

Meanwhile, the definition of the Zweig Breadth Thrust that can be sourced to Zweig's actual writings and that is given in the opening post of this thread has an outstanding track record and the kind that can be expected of a multi-sigma move in breadth.

Edited by alysomji, 02 July 2011 - 12:38 PM.

[colion]

The description in "green" does not indicate that the formulation is Zweig's Breath Thrust. Is there something else in the book that applies that name to the "green" section?

It is the Zweig Breadth Thrust. Zweig himself did not call it that but rather called it the "Super A/D Ratio," as can be seen in a later part of the book. Since the "Super A/D Ratio" (which he also called simply the "A/D Indicator") is really just a breadth extreme or breadth thrust defined by Zweig, it came to be referred to by technicians of the time as simply the "Zweig Breadth Thrust."

Zweig considered the "Super A/D Ratio" to be one of two ingredients to look for to herald a bull market, with the second measure being the "Super-Bullish Fed Indicator." More detail can be found in the book on the latter. He also said that new legs within a bull market can also result from the trigger of the "Super A/D Ratio."

If Zweig did not call it the ZBT how do you know that the description in the book is the ZBT? If Zweig did not create the name ZBT who did?

I'll be honest and frank: your question does not matter in light of the following facts...

1. There are multiple definitions people have given for the Zweig Breadth Thrust over the past several years.
2. The two most common definitions for the Zweig Breadth Thrust are the one I gave in the opening post of this thread and the one Tom McClellan gave in his latest article.
3. Out of all the definitions of the Zweig Breadth Thrust out there, the only that can be traced to any of Zweig's writings and the only one that results in the 3-, 6-, and 12-month performance that would be expected of a multi-sigma move in breadth, is the definition I gave in the opening post of this thread.

There are a couple of other technicians I respect who have also looked into this, both of whom are big fans of Zweig and one of whom once won a prestigious Charles H. Dow Award from the MTA, and they both agreed on these facts.

You can dance around the issue but when you say that something in Zweig's book is the ZBT and yet it is not called that one must wonder how you arrived at that conclusion. Do you have a link to a Zweig publication where he discusses ZBT or ZBT discussions by the esteemed technicians that you mentioned?

Absent convincing evidence to the contrary, there is no reason to second guess Zweig's own words and so the "green" quote is exactly what Zweig calls it - "Advance/Decline Indicator" with the 2:1 requirement. The McClellan article (and many others which I am sure you are aware of) describes a different formula (A/(A+D) vs. A/D) and different 10 day performance criteria (10 day indicator rise from 40% to > 61.5% vs. 2:1 A/D). Obviously two different animals although my guess is that in practical terms there might not be much difference between these two "macro" views for either long term investors or traders.

Edited by colion, 02 July 2011 - 01:55 PM.

[IYB]

My humble opinion is that thresholds, terms, triggers points and definitions are far less important than the concept at work here. Context is everything. The fact is that external follows internal as day follows night.

And I'm grateful for any data provided by generous TT members who take the time to provide it. Happy Holidays all.....D

[viccarter]

And I'm grateful for any data provided by generous TT members who take the time to provide it. Happy Holidays all.....D

Yes, and I will second this. Thanks for taking time to post this.