Chart of the Day - Friday, May 29th, 2020

Today’s Chart of the Day was shared on Twitter by Chris Cain (@PythonTrader). It’s a scatter plot showing all the components of the S&P 500. The X-axis shows the 2-week performance, and the Y-axis shows the 6-month performance (excluding the past two weeks). Over the past few weeks, we’ve witnessed rotation out of the leaders and into the beaten-down areas of the market. Stocks that had been doing well stopped doing well, and stocks that had been doing poorly have caught a bid. The downward sloping regression line illustrates that the lower the 6-month momentum was, the higher the trailing 2-week return has been (and vice versa). We asked Chris what this means for the broader market; he explained, “To me, this shows a broadening of participation and is bullish.”