Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Relative Strength Spread

 The chart below is the spread between the relative strength leaders and relative strength laggards (universe of mid and large cap stocks).  When the chart is rising, relative strength leaders are performing better than relative strength laggards.    As of 4/26/2011:

(Click to Enlarge)

After suffering through a sharply declining relative strength spread during the first half of 2009, the RS Spread has flattened out as the leaders and the laggards have generated similar performance.  However, this does not mean that relative strength strategies have not outperformed the broad market since 2009.  See PDP, for example.  Rather, it means that the leaders have not yet pulled away from the laggards.

(Click to Enlarge)

A longer-term view shows a strongly rising, albeit uneven, RS Spread reflecting the superior performance of the strong relative strength stocks over time.  It will be interesting to see if this current lull in the spread follows the pattern of 2003-2008 where relative strength really kicked in the more that the bull market aged.

See PowerShares for more information about PDP.