Chart of the Day - Friday, February 16, 2024

🏆 Today's Chart of the Day was shared by Brian G (@alphacharts).

• The S&P 500 is beginning to stray from its long-term moving average. It's up more than +10% from its 10-month moving average - the most stretched since July '23.

• While the S&P 500 is slightly stretched, Brian points out it can stretch further before mean reversion inevitably occurs.

• Brian notes: "An overstretched market can go sideways (with internal rotation) while the MA catches up. Like RSI, persistently overstretched markets are a sign of a strong bull market. The MA is being pulled higher."

The takeaway: The S&P 500 is getting stretched from its long-term moving average, but that's typical bull market behavior. Mean reversion is inevitable, but the index could move higher and stretch even further before that happens.