Stocks -- Cyclicals Leadership

Cyclicals were the hands down leaders in the first phase of the
cyclical bull run. But that leadership has lost substantial momentum
as investors have been discounting an eventual moderation in the
very strong pace of earnings recovery for cyclical companies. What
may be a more important now is whether the cyclicals can avoid a
sharp downturn in relative strength, as that might well signify that
investors are losing substantial confidence in the economic recovery
story. Although relative strength of the cyclicals has flattened out in
2010, we have yet to see that sort of destructive behavior as the
chart link shows.