By Norman Conley via

As most investors are aware, the stock market had quite a rough go in the 4th quarter 2018.

From the 9/20/18 peak through the close of trading on 12/24/18, the S&P 500 fell by 19.8%, thereby falling just short of the traditional -20% decline that characterizes bear markets. Since then, stocks have staged an impressive rally of more than 10%. The trillion-dollar question remains: where does the market go from here?

No one can know for certain, but an important technical signal was generated on 1/9/19 that potentially provides some clues. Originally identified by equity strategist Walter Deemer in the 1970’s, the signal is called Breakaway Breadth Thrust. This occurs when the number of ten-day total advancers on the New York Stock Exchange (NYSE) are greater than 1.97 times the ten-day total NYSE decliners. This condition has only occurred 23 times since World War 2.

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