Chart of the Day - Tuesday, December 29th, 2020

Today’s Chart of the Day was shared on Twitter by Grant Hawkridge (@granthawkridge). The chart shows the S&P 500 over the past two decades. Legendary technician, Bob Farrell once said, "Markets are strongest when they are broad, and weakest when they narrow to a handful of blue-chip names" Nearly 90% of the stocks in the S&P 500 are currently trading above their 200-day moving average, so it's fair to say that participation has been broad. This is nothing new, as we've seen this breadth metric remain above 80% for more than 30 trading days now. This high level of participation can't last forever. But as Grant points out, it can persist for longer than you might think. Especially after major lows. As you can see, breadth remained above 80% for nearly 200 days as the market was recovering from the Dot-com bubble and 135 days after the Great Financial Crisis. This is yet another piece of evidence that suggests we could be in the early innings of a cyclical bull market.