Equity Dividend Yield > 10 Year Treasury

CSP500-W 1-22-2015
The underlying support for the US share market is starting to unfold for the long-term (not short-Term trading). The yield on the S&P 500 has exceeded the 10-year Treasury warning that we are indeed entering the Bond Bubble. The peak in this relationship was 1931 when dividend yield reached about 9.5% after bottoming in 1929 at about 2.9%. The yield is starting the rise exceeding 2%. Effectively, the peak in dividend yield was 1931 and the historic low came in 2011 when we warned the Dow would rise to new highs.

21CAPDSPL2

 

As we turn in the Bond Bubble, capital will shift and turn to equities with individual flows also to things like gold. With yield starting to exceed the 10 year Treasury, we are in the consolidation phase for stocks and the end phase for bonds. Plus, when this indicator rises, we are often in a recession. This is not speaking well for post 2015.75.