Divergence

Look at the huge split today between Cyclical stocks (^CYC) and Consumer stocks (^CMR):

That’s unusually large. Maybe the economy is in better shape than we realize.
I still think the cyclicals are getting a bit pricey here. Many of these stocks were good buys four years ago, but are now near the top of their range. Here’s a graph of the Morgan Stanley Cyclical Index divided by the S&P 500:

Posted by Eddy Elfenbein on November 9th, 2006 at 2:27 pm

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