Here are three ratio charts we are watching to see if now is a good time to short the SP500.

Above is daily short-term VIX Futures vs Mid-Term Vix Futures. You can see as of Friday close (lower right) we were still beneath a downward sloping 100 EMA (blue). I also marked the last few time this has crossed going back the last 5 years. You can see each time we crossed the market lost more ground, between 4% and 30%. As of Friday's close, we had not crossed the 100.

The first chart below is daily SH vs SPY. Short SP500 vs Long SP500. You can see we crossed on Friday. Going back a few years, the last time 7 times this happened the SP500 lost an average of an additional 10%. This chart is concerning.

The final chart of HYG vs LQD. Risky Credit vs Lower Risk Credit. In this chart, I marked the Covid plunge in 2000. You can see the ratio was falling prior to the plunge. Currently, the ratio has been rising while the market is falling. A divergence but as of Friday, the credit markets were not indicating trouble.

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Distance=Victory

Chris

The V2 Model has gained an impressive 1,454%% from 2016 through 2021.

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Market Data From Morningstar and Etrade.

We do not anticipate what is going to happen. We allocate based on where things are. We do not forecast, we follow the math and work to get on the right side of the next extended trend.

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V2 is a proprietary investment Model the results of which we make available in our newsletter. We give our holdings, changes before they occur, our allocations, and performance on an ongoing basis. You can discover more about the Model, our performance, and how it works by checking out our website.

We have researched and developed a pool of common and popular ETFs. We will select which ETFs to invest in based on market conditions and our short-term, medium-term, and long-term trends. We will also model asset class ratio behavior for our decision-making process. Leverage will be used when appropriate and we will short the market in a downturn. If no investments meet our rules, we will go to cash. We will change holdings at any time during the month.

The investment picks may be in large-cap growth, treasuries, leverage, derivatives. We may short the market or go to cash. Holdings may include SPXU, SDS, SH, SPY, SSO, UPRO, TLT, AGG, TQQQ, SQQQ, or CASH at any time.

Chris Vig is president of The Vig Company and is an investor, artist, author, business consultant and former CEO living in Monona, WI. This article is for entertainment purposes only. We may own, buy, or sell any security listed here at any time. Do your own diligence when investing your hard-earned cash. Follow The Vig Company on Facebook.

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Is It Time To Short The Market? 3 Charts We Are Watching?