I don't see much value in ratios like that, especially in the short term (weeks), and especially daily -- too many variables and short-term correlation is very poor.
For instance, you wrote "money is flowing from corporate bonds to equities", even though it is both corporate bonds and 20+ year treasuries (TLT) in the chart, and not equities. How can you conclude money is flowing to equities? And which equities, U.S. or foreign? The problem is you can't. I also think it is a little bit late in the daily cycle to be sending a buy signal.
The ratio in your chart is between investment-grade corporates and long treasuries. It says nothing about cash, money markets, junk bonds, U.S. treasuries less than 20 years, and investments in foreign corporations or their government bonds -- all of the things that are alternatives to both U.S. corporates and long U.S. treasuries.
Actually, I liked my comparison between LQD and $SPX much better -- the correlation was very good over the period of the chart. However, I only brought it up for discussion purposes, not because I believe it.
So here's an alternative idea. Suppose we plot the ratio $SPX:TLT. Are equities about to take off, or is a triple-top forming? Maybe it’s just an SPX sell signal since price ratio is at the top of a its channel?
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