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Cyclicals Leading the Dow Higher

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We have long been harping that if the economy and stock market is truly recovering, the Morgan Stanley Cyclical Index (CYC.X) should be leading the way.

Morgan Stanley Cyclical Index Daily Chart

The Cyclical Index had moved up to the 2-year downtrend, but then consolidated there for two weeks. Today the index jumped 2.26%, and pushed through the downtrend and previous high at 560. The Dow quickly followed suit, and it's no surprise that names like Minnesota Mining (NYSE:MMM) and Johnson and Johnson (NYSE:JNJ) are leading the way.

Minnesota Mining Daily Chart

Minnesota Mining gained 20 points in the month of April, and then took a break in early May. Today the stock has exploded for $4.51. The only news that might be moving this stock is MMM being named CyberShift's "Customer of the Year." I doubt that's worth a $4 boost in stock price, and is more a reflection of the buying interest in these types of stocks. MMM is now setting up to test a previous high at $123.

Jeff Canavan
Assistant Analyst
www.premiermarkets.com

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