How to identify market sentiment?
Zweig Breadth Thrust Indicator
Market sentiment refers to the overall attitude or mood of investors toward a particular security or the broader financial market, typically described as either bullish (optimistic, expecting prices to rise) or bearish (pessimistic, expecting prices to fall).
Identifying market sentiment is crucial for traders and investors because it often drives demand and supply, influencing price movements beyond what fundamentals alone might suggest.
In this article, after outlining and briefly describing key sentiment indicators, we will highlight one tool we find especially useful for gauging market sentiment: the Zweig Breadth Thrust Indicator. The Zweig Breadth Thrust indicator most recently worked-meaning it triggered a bullish signal-on Thursday, April 24, 2025. This marked only the 16th time the indicator has triggered since its inception in 1957, underscoring its rarity and historical reliability. The signal was generated as the market saw a rapid and broad-based rally, with the indicator moving from oversold to overbought conditions within ten trading days.
While the indicator is straightforward to calculate and interpret, and its signals are covered by financial news media and market strategists, it is typically used as part of a broader toolkit rather than as a sole decision-making tool.
The indicator’s ability to signal major shifts in market momentum and the start of potential bull markets makes it a valuable tool for institutional players, including hedge funds. Hedge funds do use the Zweig Breadth Thrust Indicator-primarily as a market sentiment and confirmation tool within a larger, multi-factor investment process.
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