The widening stock market rally produced only an extremely rare bullish signal pointing to more big gains ahead

• A rare bullish stock market indicator just flashed, suggesting the S&P 500’s rally will continue.

• The Whaley Breadth Thrust Indicator was triggered due to a sharp increase in equity participation.

• The indicator has a 100% success rate over one year, with the S&P 500 delivering an average return of 23%.

A super rare bullish stock market indicator just flashed, and it’s a signal indicating that the S&P500s The 61% bull market rally that started in October 2022 has more room.

The Whaley Breadth Thrust indicator was activated on Tuesday after the S&P 500 saw the price rise a vast expansion of breadth, or participation, of gains among its non-mega-cap tech components.

It’s the 15th time the indicator has flashed since the S&P 500’s inception in 1950, according to data compiled by AllStarCharts technical analyst Grant Hawkridge.

“The Whaley Breadth Thrust indicator is triggered when the number of five-day rising stocks in the market exceeds the number of five-day falling stocks by approximately 3 to 1,” Hawkridge said. explained on X.

In other words, this bullish indicator is triggered when a stock market rally goes from extremely narrow to very wide in a short period of time.

The combination of a cool CPI report from June, the prospects for an upcoming interest rate cut by the Federal Reserve, and the possibilities for it an election victory for Donald Trump in November have boosted the shares of smaller companies in historic fashion.

The significance of the Whaley Breadth Thrust is that it has a 93% win rate when looking at the stock market over six months, and a 100% success rate over a year.

Or put another way, the stock market has never been this low one year after the Whaley Breadth Thrust was triggered.

The indicator has produced an average one-year return of 23% for the S&P 500, as well as an average six-month gain of 17.4%. Such a gain would send the S&P 500 up nearly 7,000 points.

“This is another not-so-subtle indication that stocks want to move higher. Yes, it is strange to see all these broadside increases near record highs, as they usually happen at the end of bear markets. But we also understand that this is true. “This is a trigger because so many stocks haven’t really participated in the rally,” Ryan Detrick, chief market strategist at Carson Group, told Business Insider via email on Wednesday.

The last time the Whaley Breadth Thrust signal was activated was on November 3. Since then, shares have risen almost 20%. Previously, the indicator flashed in June 2020, January 2019 and September 2009.

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