FXI/SPY led the current bull market but has diverged for about 1.5 years as the US markets respond positively to the Fed's inflation creation, while FXI does the opposite in response to the China central planners' moves to contain inflation. Domestically, the bond vigilantes would apparently have to do the work that the Politburo in China is doing. That is why all eyes on the bond.
Are you there vigilantes? If they are on strike, then get ready for some intense bull taunting. If not, trend following bulls go all quiet and stuff, as the macro wash-rinse-repeat cycle whirs along.
But tuning out all other noise, this chart shows that the S&P tends to keep rising well after the ratio tops out, and until the ratio's weekly MACD begins to hint at a bottom. Just a FWIW chart that wants to focus attention on the macro picture, which goes where it is going on its own time, not that of the market players.
http://www.biiwii.blogspot.com
http://www.biiwii.com
