Chart of the Day - Wednesday, July 15th, 2020

Today’s Chart of the Day was shared with us by Ian McMillan of Adaptiv (@the_chart_life). The chart shows the S&P 500 over the past five months, along with four key ratios; Nasdaq/Russell 2000, Growth/Value, Mega-Cap Growth/Small-Cap Value, and Tech/Financials. In a comment to The Chart Report, Ian told us, "The numerator in all four ratios (Nasdaq, Growth, Mega-Cap Growth, and Tech) are all correlated to each other, and so are the denominators (Russell 2000, Value, Small-Cap Value, and Financials). So when the relative trend changes for one, you usually see it in all the relationships." Notice that in recent months, when all four ratios are trending lower, the S&P 500 has risen. On the other hand, when all four ratios are trending higher, the S&P 500 has stalled out. In recent days, all four ratios have begun to trend lower. Will weakness in these relative trends be a bullish tailwind for S&P 500 similar to what we saw in mid-May?