Chart of the Day - Wednesday, November 11th, 2020

Today’s Chart of the Day was shared on Twitter by Ed Clissold of Ned Davis Research (@edclissold). Rotation has been a major theme this week. Leading areas of the market (Tech, Large-Cap, Growth) have sold-off recently while lagging areas of the market (Energy, Financials, Small-Caps, Value) have suddenly caught a bid. This rotation probably didn't feel too good if you've been overweight Large-Cap Tech like many folks out there. However, rotation is a healthy part of bull markets. Ed points out that the recent rotation has helped breadth improve dramatically, with over 85% of S&P 500 stocks currently above their 200-day moving averages. According to his data, that's the highest reading for this breadth metric since 2013. We may be a bit short-term overbought here, but the S&P 500 has historically seen above-average 12-month returns when this breadth metric is above 61%.