Optimism Builds as Breadth Triggers the Rare Zweig Breadth Thrust
Stock pickers are back in business — for now — and Google's report bodes well for the entire AI sector
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Stocks moved strongly higher for the third straight day as investors gained optimism about potential tariff and trade deals. The Trump administration continues to signal that deals are close with countries such as India and South Korea. President Trump stated that there is some dialogue with China, although the Chinese have denied any talks.
In addition to the hope of trade deals, there is also hope that the Fed will ride to the rescue should there be any economic fallout from tariffs. Fed Governors Christopher Waller and Beth Hammack both took a more dovish posture than that of Fed Chair Powell. The central bank could move to cut rates as early as June if there is clear evidence of slowing.
While there is still tremendous uncertainty about both tariffs and the economy, market players are becoming more optimistic and are starting to fear they may be missing out on a major market turn. Technical stocks led the charge again, with the Magnificent Seven MAGS names up 3%. After the market close, Alphabet/Google GOOGL put up some very strong numbers, and the group jumped another 1% as the Google stock moved sharply higher. The Google report bodes well for the entire AI sector.
Technically, the S&P 500 finished at almost the exact same level it was on the record day of April 4 when the delay in tariffs was announced. That huge gain was chipped away at for a few weeks in the ensuing volatility but has now been fully recovered.
Most notably, the Russell 2000 small-cap index IWM and biotechnology IBB have had substantial outperformance during that period and have already broken out over that April 4 high.
Breadth has been excellent and has triggered something called the Zweig Breadth Thrust, which has led to positive outcomes all sixteen times it has occurred previously.
FOMO is in play, and stock pickers are back in business — for now.
Have a good evening. I’ll see you Friday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
