Industrials fell off a relative cliff starting in July, effectively giving up all of its alpha/outperformance attained since early 2010.
The swift loss of leadership was an early tell that not all was well with markets.
Consumer Discretionary — Going Down Swinging
While consumer discretionary has not declined as substantially relative to the market as industrials, I believe leadership is on the verge of ending in a major way.
Notice that the discretionary sector bottomed out mid-November 2008, providing an early signal that markets were on the verge of bottoming before the March lows.
The bottom line is that while industrials and consumer discretionary were market leaders, these two sectors remain vulnerable from an outperformance standpoint regardless of whether markets have bottomed following the summer crash of 2011.