V-Shaped Recovery Could Be Coming After All

I often like to look at how the Morgan Stanley Cyclical Index is performing relative to the S&P 500.

The past year has been a dramatic ride. Cyclicals led the market down, the led them back up. Here's the CYC divided by the S&P 500.

If the equity market is correct, perhaps we're in for a V-shaped recovery.

Comments

[Mad Hedge F...:]

zxc The one absolute, take it to the bank, bet the ranch fact you can count on right now is that there is no value in the stock market. We are at a lofty 20 X earnings, and historically, when the market sported such a rich valuation, a 7% drop ensued in the following year. But what is history, but the ravings of an angry, frustrated old trader? Maybe having seen the best bargains in a century only six months ago, I’m spoiled. I have always been a tightwad. I must be the only guy around who flies his own private plane to garage sales for the sheer love of the deal (where else can one find Dean Martin records in decent playable condition for 25 cents each?). I just reviewed all of the stocks and sectors I liked at the beginning of the year, and a more picked over field you never saw. (Click here for my New Year list ) The list of big winners is long: FCX, FXI, BYDFF, BIDU, X, gold, silver, copper, crude, oil services, junk bonds (JNK), (HYG), emerging markets (EEM), BRIC’s, Korea (EWY), with shorts in long dated Treasuries (TBT), volatility (VIX), and the dollar (UDN), (ULE). Even tax exempt munis have been on a tear. Many of my core positions are up over 400%. When everything in your portfolio has done so well, it’s time to go hide. The problem is that my more loyal, even fanatical followers have taken out paid subscriptions for up to two years, so I must keep dancing. Hence, the recent increase in book reviews, political pieces, or just outright frivolous stories. What you do here is deep research and list building, so when the window opens you can jump through with both feet, and without any reservations. I hate being out of the market. But I hate losing money even more.

Sep 28 05:51 PM

[js_mcknz:]

...or perhaps we are ready to start October 2007 all over again.

Sep 28 06:21 PM

[Gary A:]

V shaped recovery? How? Are people making more? Or are they making what they made in 1980?

Interest rates will rise, and that will slow recovery. While the Fed would like a little inflation, the consumer cannot afford an ounce of inflation. We are tapped out. V shaped? Are you kidding me?

Sep 28 06:48 PM