The RS indicator for the cyclicals normally gives you a good sense of how the market views the
prospects for the broad economy in terms of direction and momemtum. The RS indicator is near
a 30+ plus year high recently set, but is exhibiting hesitation in 2011 after leading the broader
market higher during the recent upleg. The energy group has been the big game in town in recent
months, and the hesitation of the cyclicals RS indicator may only reflect some rotation into the
oils sector as a pricing power earnings play. However, the RS action of the cyclicals now bears
watching because a topping process there could have a spillover effect for the market overall.
$CYC RS chart.
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