I stated in a previous post (http://tradingjournalinvestmentjunky.blogspot.com/2012/08/growth-and-cyclical-companies-not.html) that I wanted to look at a long-term analysis of the S&P 500 versus the relative price of the Morgan Stanley Cyclical Index and the Dow Jones Consumer Non-Cyclical index. To that end, I compiled a longer-term chart that compares these indexes S&P 500 versus the relative price of Morgan Stanley Cyclical Index (ticker ^CYC on Yahoo Finance) and the IShares Dow Jones Consumer Good Index (ticker IYK), which tracks the performance of the Dow Jones Consumer Non-Cyclical Index. I present two charts below: the price trend since 2000 and the year-over-year change for the indexes.
The one thing that really stood out to me is that, except for a period early last decade, the price and the performance of the S&P 500 and the relative price of the Cyclical and Non-Cyclical indexes have never significantly diverged. That is up until now. It may just be an issue of the composition of the indexes or tracking error, but the divergence we are seeing is unprecedented versus the historical relationship for the last 12 years. Very Interesting.
The one thing that really stood out to me is that, except for a period early last decade, the price and the performance of the S&P 500 and the relative price of the Cyclical and Non-Cyclical indexes have never significantly diverged. That is up until now. It may just be an issue of the composition of the indexes or tracking error, but the divergence we are seeing is unprecedented versus the historical relationship for the last 12 years. Very Interesting.
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