Chart of the Day - Friday, October 9th, 2020

Today’s Chart of the Day was shared on Twitter by Ed Clissold of Ned Davis Research (@edclissold). There were quite a few bullish technical developments this week! We saw fresh all-time highs from bellwether industry groups including Transports, Semiconductors, and Home Builders. More notably, market internals improved dramatically. The Advance/Decline line hit an all-time high, and we saw several positive breadth thrusts. Ed points out that one of those breadth thrust signals occurred today when the percentage of S&P 500 stocks above their 10-day moving averages rose above 90% (after falling to at least 10% first). As you can see from the arrows on the chart, these signals are typically associated with intermediate-term lows. Take a look at the summary statistics in the top left corner. The S&P 500 has historically seen above-average returns in both the short and long-term following this signal.