The Cyclical Rally Lives

The rally in cyclical stocks is still going strong. Last month, I pointed out that on March 19, the ratio of the Morgan Stanley Cyclical Index (^CYC) versus the S&P 500 reached a 13-year high.
The ratio backed off some afterward as the cyclicals slightly underperformed the overall market. But that changed last week. This recent leg of the bull market has been greatly helped by the cyclicals. Yesterday, the overall CYC reached an all-time as it closed over 1,000 for the first time.
The CYC-to-S&P ratio has now fully recovered and it close to making another 13-year high. In fact, it’s not too far from taking out the 1994 high as well.
Here’s a look at how the ratio has done over the past few weeks:

And here’s how the ratio has done over the last 30 years:

Update: It happened. The ratio made a new 13-year high today. The S&P 500 closed 0.08% lower while the CYC rose 0.02%.

Posted by Eddy Elfenbein on April 26th, 2007 at 2:43 pm

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