About Me

Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Thursday, October 28, 2010

More On Value Of Cyclicals' Relative Strength

I am here adding a bit more on to yesterday's post re: the relative strength line for
MSCI's $CYC index. I view the relative strength line as a decent indicator of the
market's expectation for economic momentum potential. I think it ranks somewhere
between a leading and a coincident indicator since it keys off not just pricing power
for cyclicals (leading) but full profit potential (coincident) as well. The RS line
is not used by economists as a formal economic or profits indicator, but it does
reflect the opinion of the market's players. Since the "smart money" by definition
moves into and out of stock sectors first, it is wise to watch for changes of trend in
the RS line of all stock sectors and industry groups and to also ask yourself whether
investors know something you do not. $CYC RS index chart.

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