The bank index has led the S&P 500 since late 2011. Furthermore, a tapering of QE bond manipulation would theoretically at least favor the banks relative to other sectors as the long yield vs. ZIRP spread widens. So we might expect this sector to be a leader on a relative basis.

In fact, the main scenario that I can see that might compromise BKX-SPX in the near term would be a sudden decline in economic activity, causing the Fed to declare it will cease its tapering regime.

I hope that doesn’t happen because I would like to see these people taper out of the T bond manipulation game so we can get a level playing field going in the markets again; one where you get by on discipline and skills, not a greedy ability to simply go ‘risk on’ and throw all caution to the wind.

BKX-SPX has maintained the moving averages and continues to sport a bullish looking daily pattern.

As for the weekly view, nope, nothin’ wrong here either…

[edit]  So the market feels bearish today and it is in need of a correction to curtail that terribly over bullish sentiment. But BKX-SPX is up hard this morning. The market can decline against the ratio in the short term, but it would be a classic positive divergence if it continues strong against a routine market correction. No indicator exists in a vacuum however, so this would all be pending several other indicators as well.