Financials' Strength Versus the S&P 500 At Multi-Year Lows

While financials had their first up day since October 9th Monday, their relative strength versus the S&P 500 remains at multi-year lows. The chart below shows the relative strength of the financial sector since 2000.

In the chart, a rising line indicates that the sector outperformed the S&P 500. We also color coded the series to show when the S&P 500 was in a bear market (red) and a bull market (green).

Many argue that the overall market cannot rally without leadership in the financial sector. However, as the chart illustrates, the last time the sector really showed any degree of outperformance versus the S&P 500 was during the bear market from 2000 - 2002. During the current bull market, the sector has not really had any period of significant outperformance.

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