Chart of the Day - Tuesday, March 10th, 2020

Today’s Chart of the Day was shared on Twitter by David Keller (@DKellerCMT). It's a chart of the stocks to bonds ratio ($SPY/TLT), over the past three years. When the ratio is falling as it has been over the past few weeks, it means that stocks are underperforming bonds and visa versa. The recent sell-off in stocks and the surge in bonds has forced this ratio to its lowest level since 2016. As David points out, the ratio is now oversold and extremely stretched from both its short-term and long-term moving averages. He adds that the ratio "could see a snapback rally with a bounce in stocks and a pullback in bonds." However, the ratio is currently in a downtrend, indicating that any outperformance from stocks relative to bonds in the near-term would likely be temporary.