Three V2 Ratios For A Rainy Day!

Good morning:

We just got a few inches of rain. A good thing, right? Unless you are in West Virginia or Death Valley. Rain in Wisconsin gives me more computer time.

The SP500 has had a nice run up the past few weeks. Will it continue? I don't know. We don't forecast. CPI data is due Wednesday morning. That will have some bearing on where we go.

Here are three of the 120 ratios we track to help figure it out:

1. SP500 vs Commodities. This is a proxy for market growth vs inflation. You can see stocks are continuing to outperform and are crossing a key moving average. This trend currently favors stocks. Has inflation peaked? We will know more on Wednesday.

2. SP500 vs "Defensive" Utilities. This is a bit concerning. This ratio is flat for the past few months. A bit of a divergence. We would like to see utilities start to underperform for markets to improve.

3. SPY vs VIX. This is sort of an offense/defense ratio. You can see this ratio improving since June. But, we have not broken the downtrend favoring the VIX for all of 2022. There is work to do.

Each of these ratios is part of our V2 Model and has some bearing on our current holdings. We keep an open mind and follow the math - in either direction.

The V2 Ratio was up this week and has moved into the green year-to-date. We continue to outpace the SP500 by nearly 14%.

Here are V2's current performance, holdings, and allocations:

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