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 8/9/2011:
After a sharp lag in the initial stages of the bull market in 2009, high relative strength securities have kept pace with relative strength laggards over the past two years. If history is a guide, as shown in the longer-term chart below, this spread will eventually resume its upward trend.
Over time, relative strength leaders have delivered superior performance compared to relative strength laggards.
