Martin Zweig proposed the following rules for stock market buy and sell signals based upon the level and direction of interest rates in Winning on Wall Street.
Buy Signal: Any initial cut in the Prime Rate if the peak was less than 8 percent. Or, if the peak is 8 percent or greater, a buy signal comes on either the second of two cuts or a full 1 percent cut in the rate.
Sell Signal: Any initial hike in the Prime...
“The trend in interest rates and Federal Reserve policy is the dominant factor in determining the stock market’s major direction” according to Martin Zweig in Winning on Wall Street. In telling his readers how to get in and out of the stock market at optimal moments, Zweig began with the Prime Rate Indicator.
The Prime Rate is the rate at which banks lend money to their most-favored customers. Zweig observed...