The Cyclicals Are Trailing Again

I often talk about looking at the relative performance of cyclical stocks versus the rest of the market. I think this is an important indicator of what the market is thinking.

The ratio of the Morgan Stanley Cyclical Index ($CYC) to the S&P 500 reached a top in early January and another in mid-February. The CYC is trailing the market for the seventh day in a row.

This is very important because these cycles tend to last for years once they get started. If the Dow had kept pace with the CYC since the March 2009 low, it would be close to 25,000 today.

Posted by on April 14th, 2011 at 10:11 am


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