What Is Thrust

Thrust into a minefield of power

The Pheu Thai Party will have to tread several political minefields despite being able to form an outright government after winning a simple majority.

First and foremost is the nomination of ex-prime minister Thaksin Shinawatra's sister Yingluck Shinawatra as Thailand's first female prime minister.

The process will expose her to political storms from all directions for being Thaksin's proxy, or in his words "my clone".

Is Thaksin ready to usher his sister into that position, and if so, is he certain that she will be able to weather the political storms ahead?

"The opposition she had to confront during the election campaign would be nothing when compared with what Yingluck would face as prime minister," commented a seasoned political observer, a view shared by many experts.

If she manages to become prime minister, Yingluck will have to brace for tough scrutiny on her past and her background by Democrat politicians in the opposition. A censure debate could be a really bad nightmare for her.

Pheu Thai announced during the election campaign that Yingluck would be its prime-ministerial candidate, so it would not be easy for Thaksin to make an about-turn. "If it isn't Yingluck, it will tantamount to lying to the people," Pheu Thai leader Yongyuth Wichaidit said in a recent interview.

In addition to the perception that the party had lied to the people, a bigger problem could be the subsequent infighting for the prime minister's seat, a problem that was squashed when Yingluck was nominated as Pheu Thai's top candidate.

According to many political observers, Yongyuth had the best chance if Thaksin did not want his sister to become the next prime minister. He is a person the Pheu Thai's big boss could trust wholeheartedly, and his rise to power would be unlikely to lead to any severe rift in the party. However, Yongyuth admitted to The Nation that "I am not ready and will never become" prime minister.

Another likely candidate for the premiership is Pracha Promnok, the man whom Pheu Thai MPs backed in December 2008 during his contest in the House of Representatives against Democrat Party leader Abhisit Vejjajiva for the prime minister's seat. Pracha at that time was with the small Puea Pandin Party.

However, Pracha's chance is minimal, as Chalerm Yoobamrung, another senior Pheu Thai figure, is on a higher position on the party list (Chalerm is No 3, compared with Pracha's No 5).

The Breadth Thrust Indicator: Did Last Week's Surge Signal A Big ...

The robust end of quarter rally in the stock market has come on strong breadth numbers, meaning that the number of advances has exceeded the number of declines in a big way.  When this happens over a period of days, it can constitute a "breadth thrust".

Different technicians have different definitions for what constitutes a breadth thrust, but to my knowledge the first person to coin that term was Martin Zweig.  He talked about a breadth thrust as quatified by a unique indicator tied to the number of advances and declines.  Zweig would calculate what he called a 10-day exponential moving average (EMA) of the number of advances divided by advances plus declines, or A/(A+D).  In the original terminology of P.N. Haurlan , who first introduced EMAs to the study of price series, a 10-day EMA is an 18% Trend, meaning that 18% is the smoothing constant applied to each new day's data. 

Zweig would say that a breadth thrust occurs when this 10-day EMA dips below a value of 0.40 and then rises above 0.615 within 10 trading days.  Such a big reversal signals a huge shift in the momentum of the breadth data, and it shows that there is enough money coming into the market to lift the majority of stocks in a persistent way. 

The instances of a qualifying breadth thrust event according to Zweig's definition are exceedingly rare.  By our count, there have only been a handful of actual qualifying signals over several decades.

Gerald Appel adapted Zweig's idea of a breadth thrust signal, ignoring the requirement to dip below 0.40, but focusing on the rise above a value of 0.615.  Appel adapted that to a mechanical trading system he developed in the 1980s, and called such high readings a "breadth thrust continuation signal".  The idea was that when you see one of these, it constitutes a sign that liquidity is so plentiful that any signals to go short in the system would likely not work out very well.  So for some period after such a signal, one should ignore any system-generated signals to go short. 

This week's strong breadth data produced a reading of 0.658 as of July 1, which is well above the 0.615 threshold.  But as the chart shows, these high readings do not always work out as signals that an uptrend is going to last for a while longer.  Sometimes they can mark blowoffs, and this phenomenon of having blowoff market rallies has been much more prevalent in the last few years.  A lot of old standards for high and low thresholds have changed lately, thanks to algorithmic trading, the elimination of the uptick rule, and other changes.

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