Another Look at the Cyclical Top

On January 10th, the ratio of the Morgan Stanley Cyclical Index (^CYC) to the S&P 500 reached an all-time high of 0.844.

Then from January 11th to January 21st, the CYC underperformed the S&P 500 for seven-straight sessions. This lead me to say that cyclicals were probably headed for a long period of underperformance.

The CYC responded by beating the S&P 500 for four-straight days before getting crushed on Friday. That turned out to be the CYC’s worst relative performance in over five months.

The CYC looks to outperform the S&P 500 again today. Here’s an updated look at the CYC divided by the S&P 500:

Posted by on February 1st, 2011 at 9:54 am


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