Hi Liam and Welcome, Re: v-Wave and its relative meaning............
Think of the v-Wave as a barometer for the stock markets. In our case, a rising v-Wave value means market risk is rising. The opposite is also true.
Further we have used the long history of the Value Line Appreciation Potential as a database for calculating the v-Wave. From that data we determined what the top and bottom 10% of the database were. Those inflection points are where we feel the "high" and "low" risk data start. Further we scaled the v-Wave to the extremes of what the v-Wave would have been historically. This gave us a scale that would be low in suggested cash during times of low risk and quite high in times of high risk.
The idea was that AIM would most likely followed the same general path over time in selling into strength (higher risk markets) and buying into market weakness (lower risk markets). So, rather than use a "One Size Fits All" cash starting point, we could tailor the cash starting point to a generally accepted view of the market's relative risk at any point in time.
Hope this helps,
