People need to ask questions like ‘what, if anything are the implications of a declining BKX-SPX ratio?’ because this ratio, which has had us prepared for some bearish stuff since early 2014, remains bearish.

NFTRH was on the first two lower highs in real time and now the ratio has gone on to establish a beautiful bear trend.  It’s only a daily chart, but the weekly is trend DOWN as well. There is no positive divergence for the stock market here.

Apparently the carry trade idea (based on the tapering of QE’s bond purchases, which would theoretically benefit the banks by pressuring long-term yields upward while ZIRP is maintained by Fed Funds) has run out of steam. Here again is the very notable reversal in lending activity, in line with the drop in long-term yields (makes sense).

And yes we were also very much on the drop in yields amidst the Great Rotation™ hype manufactured by the financial media. It’s been like shooting fish in a barrel this year from a macro perspective. Here’s the Continuum (NFTRH’s most basic tool) putting the Dunce Cap on all the Great Rotation geniuses.

30 year yields have dropped for all of 2014 in the face of QE tapering’s implied upward pressure. Now they are at a logical support area after retracing about 50% of the rise that comically enough came about despite full on QE. You have got to love this market because not only does it challenge you and me, but it often flies in the face of the ones that ardent conspiracy theorists think are pulling every string and controlling every outcome.

You may recall this weekly chart of the 10 year yield. It was reviewed earlier in the year for its toppy looking pattern with support noted. It’s been messing around with this support for the last few months.

We can add two more questions that people should consider; what if yields find support and rise here, and what if they continue down despite tapering?  Be prepared either way. This market is no longer for linear thinkers with embedded orthodoxies (the bullish ones did quite well just auto piloting their views over the last couple of years).

Within the options, I am including a view of potential future bullishness pending the market dump that I think is going to resume.  Just so it’s not interpreted as a perma bear writing here.  Indeed, this is a market in which being perma anything is not recommended. The macro signals will decide and point the way.