I'm learning linear regression, and I ran a step function for linear regression and checked out the residuals vs fitted plot for the final equation. The residual looks homoscedastic but it's not randomly distributed above and below the line. I'm not sure how to interpret that. The residuals vs leverage plot doesn't indicate I have any points with a high cook's distance. My R-squared value is pretty awful...here's the summary output:
Residual standard error: 2.337 on 58588 degrees of freedom
Multiple R-squared: 0.3692, Adjusted R-squared: 0.3671
F-statistic: 174.1 on 197 and 58588 DF, p-value: < 2.2e-16
But I don't quite understand what this residuals vs fitted plot means. And what my next step in developing a better model would be.