I mentioned in a December 16, 2010 post that retail had probably seen its best days as a sector and that one would have to be selective. As it turns out, that was pretty much on the money. The chart above shows the S&P Retail Index (RLX) trailing the S&P 500 as a whole and badly trailing financials (shown here by XLF) over the past month.
I suspect that retail will continue to underperform for a little while here. I'm not sure that this indicates much other than retail's gains were a little overdone. Nearly every leading economic indicator in recent weeks is broadly positive.