Chart of the Day - Tuesday, March 31st, 2020

Today’s Chart of the Day was shared on Twitter by David Keller (@DKellerCMT). It's a chart of the S&P 500 over the past 20-years, highlighting the Zweig Breadth Thrust Indicator. Named after the legendary trader, Marty Zweig, this indicator essentially looks for instances where breadth goes from extremely negative to positive within a relatively short amount of time (two weeks or less). It's calculated using a 10-day moving average of the number of advancing stocks on the NYSE, divided by the total number of stocks on the NYSE. A signal occurs when that 10-day exponential moving average goes from being below .40 to being above .61. As David points out, there have only been six of these signals in the past 20-years, but we could be headed for lucky number seven in the next few days. After each of those six signals, the market was higher 6-12 months later 100% of the time. To be fair, it was a bit early at calling the bottom in 2004, and 2015. However, it's still a pretty robust signal. For more on this indicator, check out this video from David.