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V2 Model September 19, 2020 Update

V2 Model September 19, 2020 Update

Good morning!

Welcome new members.

Here is V2 performance vs our benchmark of SPY.

This week:

V2 +.54%

SPY -.62%

This year:

V2 +133.12%

SPY +4.24%

Below are a few charts to put things into some context.

A. The first chart is of the V2 Ratio #2. The Ratio decreased by 3.28% to 5.07. You can see in Point 1 that the Ratio moved up and we were close to making a bullish cross mid-week. You can see that did not happen and the Ratio got weaker the remainder of the week. You can see in Point 2 the Chande trend meter looked like it was going to move to the green, positive trend area. It was rejected. You can also see in Point 3 the MACD was trending positive and then rolled over mid week. So we have a short term negative trend.

B. Next is the daily chart of SPY (SP500). In Point 1 you can see the price closed below the green 50 day moving average (the first time since April 24th). This is short term bearish. You can also see we are still well above the pink 100 day and purple 200 day moving averages. These are sloping up and intermediate term bullish. It would not be surprising to see the price tag either of these areas in the coming weeks. In Point 2 and 3 you can see we have concerning RSI and MACD slopes and positions. In summary, the daily chart looks weak.

C. Finally is a daily chart of HYG - The High Yield Corporate bond ETF. We use this as a proxy for liquidity in the market. Liquidity is one potential leading indicator we track. Starting this past March, you can see in Points 1 2 and 3 the upward movement as each level of Fed and Fiscal stimulus was announced to support the markets. You can see now that as the new stimulus plan is still being negotiated and the Fed has not made any surprising announcements we have trended sideways since the end of July. Any new stimulus announcement could move the markets materially higher. Without it, election uncertainty, and the virus getting worse in many areas we do have the risk of weak liquidity and more downside to the markets.

Again we reviewed dozens of additional ratios and charts we noted that quite a few are still at or near inflection points.

We will stay flexible and keep an open mind to changes in either direction. We will follow the math.

V2 currently holds SH.

The V2 Model has performed exactly as expected.

Distance=Victory

Chris

ps. Please invite others to join The Vig Company. And also, please, do not share the V2 Model allocations with others. We keep the monthly charges low for all as everyone pays their own way. Our information should not be copied or shared in any form.

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