Chart of the Day - Tuesday, October 26th, 2021

Today’s Chart of the Day was shared in a note by Jason Goepfert of SentimenTrader (@SentimenTrader). It's a chart of the S&P 500 over the past six months, and the A/D Line in the lower panel. As you might know, the A/D Line is a popular breadth indicator that often leads the market higher or lower. It recently broke out to an all-time high for the first time in over a month, thereby confirming the recent strength in the S&P 500. In the note, Jason points out that the odds of a 10% correction plummet when the A/D Line breaks out to an all-time high like this. He explained; "Since 1928, the S&P 500 was three times more likely to suffer a 10% decline at some point within the next three months if the S&P's A/D Line was not at a multi-year high. When it did break out to a new high, there was only a 4.6% probability of a 10% or greater decline within the next few months." For more on this, check out the full note here.