Cyclicals Relative Strength Hits Two-Year High

Here’s a look at one of my favorite ways to measure the stock market’s mood. It’s the Morgan Stanley Cyclical Index divided by the S&P 500.


The ratio closed today at its highest point since July 26, 2011.

The ratio’s all-time high came in February 2011, but cyclicals were clobbered that summer.

What I find interesting is that, in retrospect, we can see how important Mario Draghi’s bold claim to stand behind the euro changed the direction of the market.

That came on July 26, 2012, and the cyclical’s relative performance hit bottom on August 2. Since then, the cyclical stocks have been leading the market.

Posted by on November 25th, 2013 at 6:23 pm

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