Thursday's Zweig breadth thrust is the 4th confirming signal high probability "low is in" for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap

Tom Lee, CFA

VIDEO: While the chasm between macro (bearish) and equity internals (bullish) is wide, Thursday we got the 4th confirming signal.

Please click below to view our Macro Minute (duration: 8:18).

Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap

At the start of this week, we believed that we were past the point of “maximum uncertainty” but it was not clear if we were past the point of “max pain” — but we were watching the market’s reaction to TSLA earnings (Tue post-close) as a tell. There were several key developments this week (see below) that in our view, have raised the probability “the low is in” to more than 90%. In other words, the bull market is intact, after suffering a mighty 20% correction:

  • Since tariff “liberation day” April 2, equity and risk markets have been caught in downward vortex, also buffeted by a continuously darkening macro picture. This has made this 3 week period the most difficult we have navigated in 30 years, moreso than even COVID and the GFC.
  • The conflict that we have talked about is the worsening macro against what looks like signs stocks had priced in a lot of bad news. The macro bears story has these elements:
    – Economic Armageddon
    – End of American “exceptionalism”
    – US stocks “the top is in”
    – Gold and muni-bonds only
  • By contrast, we have written about the pervasive signs stocks had priced in a lot of bad news. In a summary sense, these are the 3 elements:
    – Pervasive bearish sentiment
    – “Internal low” registered
    – 4 key signs of “bottom is in” (see below)
  • But quantitatively, there are 4 confirming signs of a bottom (and waiting for a 5th):
    – On 4/14: VIX surged to >50 and then closed below 31:
    – bottom in 2009 and 2020
    – On 4/22: Two consecutive +90% advancer days,
    – 3 of 3 times previously confirmed low (3/12/09, 8/9/11 and 4/6/20)
    – On 4/23: High-yield OaS recover 50% widening
    – confirms we are walking back from recession
    – On 4/24: Zweig Breadth Thrust triggered
    – 11 previous signals, 100% win-ratio 1M, 6M and 12M later
    – WAITING: 50% retrace, S&P 500 5,491 <– current 5,485 CLOSE!
  • The S&P 500 is close to confirming a 50% retracement of the decline (2/18/25 to 4/8/25). This level is 6 points higher than the close on Thursday.
  • The Zweig Breadth thrust is a 10-day moving average of advancing vs declining issues and when it is oversold (0.4) and then above 0.615, this is a breadth thrust. This was triggered on Thu close.
  • The fact that 4 triggers and possibly 5 (near term) raise the probability the low is in. This is in the context we realize the macro remains pretty uncertain.
  • WHAT COULD GO WRONG? The other shoes to drop (worrying investors) are:
    – Tariff war turns into “Cold War”
    – Economic ripples from “shock” lead to global recession
    – Financial crisis ensues from rapid financial de-leveraging
    – Inflation expectations surge leading to “greed-flation” and Fed is forced to hike rates
    – S&P 500 EPS estimates fall >20% from here
  • In terms of macro data, this week was on-balance better than expected. U Mich inflation is this coming Friday:
    – 4/22 Tue 10:00 AM ET: Apr Richmond Fed Manufacturing Survey    -13 vs -7e   
    – 4/23 Wed 9:45 AM ET: Apr P S&P Global Manufacturing PMI    50.7 vs 49.0e
    – 4/23 Wed 9:45 AM ET: Apr P S&P Global Services PMI    51.4 vs 52.8e
    – 4/23 Wed 10:00 AM ET: Treasury Sec Bessent Speaks IIF
    – 4/23 Wed 10:00 AM ET: Mar New Home Sales   724k vs 684ke
    – 4/23 Wed 2:00 PM ET: Apr Fed Releases Beige Book   
    – 4/24 Thu 8:30 AM ET: Mar P Durable Goods Orders MoM    9.2% vs 2.0%e
    – 4/24 Thu 8:30 AM ET: Mar Chicago Fed Nat Activity Index    -0.03 vs 0.18e
    – 4/24 Thu 10:00 AM ET: Mar Existing Home Sales    4.0m vs 4.1me
    – 4/24 Thu 11:00 AM ET: Apr Kansas City Fed Manufacturing Survey    -4 vs -5e
    – 4/25 Fri 10:00 AM ET: Apr F U. Mich. 1yr Inf Exp

BOTTOM LINE: Probabilities favor “bottom is in”

The bull market has proven itself intact. We have identified two lists of “wash out” stocks, both large-cap (22 names) and SMID-cap (27 names). We want to look at stocks which did not make a new low between April 1-April 8, even as the S&P 500 fell to new lows.

The large-cap criteria is as follows:

  • Current Market Cap >$15 Billion
  • Declined more than 30% before Feb 18th
  • Didn’t make new closing low between April 1st & April 8th
  • Current price down more than 25% from 52W High

The large-cap “washed out” tickers are:

WBD LULU TSLA DKNG DG DLTR BF STZ RKT COIN HOOD HUM UAL LDOS TEAM HUBS MSTR CRM NET SMCI EIX VST

The SMID-cap criteria is as follows:

  • Current Market Cap <$15 Billion
  • Declined more than 30% before Feb 18th
  • Didn’t make new closing low between April 1st & April 8th
  • Current price down more than 25% from 52W High
  • Short interest Day to Cover Ratio >2

The SMID-cap “washed out” tickers are:

DJT ROKU AS LCID RIVN LKQ CROX NCLH WBA CELH SOFI MKTX COLB GRAL INSP PRGO CNXC DAY LUV LYFT CFLT DT ESTC PCOR LITE ALAB AES

Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap
Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap
Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap
Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap

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45 SMID Granny Shot Ideas: We performed our quarterly rebalance on 2/18. Full stock list here -> Click here

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Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap

Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap

Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap

Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap

Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap

Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap

Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap

Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap

Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap
Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap

Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap

Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap

Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap

Key incoming data April:

  • 4/1 9:45 AM ET: Mar F S&P Global Manufacturing PMI Tame
  • 4/1 10:00 AM ET: Mar ISM Manufacturing PMI Tame
  • 4/1 10:00 AM ET: Feb JOLTS Job Openings Tame
  • 4/2 10:00 AM ET: Feb F Durable Goods Orders MoM Tame
  • 4/3 8:30 AM ET: Feb Trade Balance Tame
  • 4/3 9:45 AM ET: Mar F S&P Global Services PMI Tame
  • 4/3 10:00 AM ET: Mar ISM Services PMI Tame
  • 4/4 8:30 AM ET: Mar Non-farm Payrolls Hot
  • 4/7 9:00 AM ET: Mar F Manheim Used Vehicle Index Tame
  • 4/8 6:00 AM ET: Mar Small Business Optimism Survey Tame
  • 4/9 2:00 PM ET: Mar FOMC Meeting Minutes Mixed
  • 4/10 8:30 AM ET: Mar Core CPI MoM Tame
  • 4/11 8:30 AM ET: Mar Core PPI MoM Tame
  • 4/11 10:00 AM ET: Apr P U. Mich. 1yr Inf Exp Hot
  • 4/14 11:00 AM ET: Mar NYFed 1yr Inf Exp Mixed
  • 4/15 8:30 AM ET: Apr Empire Manufacturing Survey Tame
  • 4/16 8:30 AM ET: Mar Retail Sales Tame
  • 4/16 10:00 AM ET: Apr NAHB Housing Market Index Tame
  • 4/16 4:00 PM ET: Feb Net TIC Flows Tame
  • 4/17 8:30 AM ET: Apr Philly Fed Business Outlook Tame
  • 4/17 9:00 AM ET: Apr M Manheim Used Vehicle Index Mixed
  • 4/23 9:45 AM ET: Apr P S&P Global Services PMI Tame
  • 4/23 9:45 AM ET: Apr P S&P Global Manufacturing PMI Tame
  • 4/23 10:00 AM ET: Mar New Home Sales Tame
  • 4/23 2:00 PM ET: Apr Fed Releases Beige Book Mixed
  • 4/24 8:30 AM ET: Mar P Durable Goods Orders MoM Hot
  • 4/24 8:30 AM ET: Mar Chicago Fed Nat Activity Index Tame
  • 4/24 10:00 AM ET: Mar Existing Home Sales Tame
  • 4/25 10:00 AM ET: Apr F U. Mich. 1yr Inf Exp
  • 4/28 10:30 AM ET: Apr Dallas Fed Manuf. Activity Survey
  • 4/29 9:00 AM ET: Feb S&P CS home price 20-City MoM
  • 4/29 10:00 AM ET: Apr Conference Board Consumer Confidence
  • 4/29 10:00 AM ET: Mar JOLTS Job Openings
  • 4/30 8:30 AM ET: 1Q A GDP QoQ
  • 4/30 8:30 AM ET: 1Q ECI QoQ
  • 4/30 10:00 AM ET: Mar Core PCE MoM

Economic Data Performance Tracker 2025:

Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap

Economic Data Performance Tracker 2024:

Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap

Economic Data Performance Tracker 2023:

Thursday's Zweig breadth thrust is the 4th confirming signal high probability low is in for equities even as macro remains uncertain. 22 Large-cap ideas and 27 SMID-cap

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