Hi Tom.
The sudden jump in cWave occurs because of the upward crossing of the 16.5 PE+BoE lower line.
From the iBox
From our Relative Valuation measure which is constructed by summing the current FT All Share Indexes PE with the current Bank of England Base Interest Rate we identify a multiplier of between 1 and 3. We use 1 when the RV is in high risk (above 18.5), 3 when the market is in low risk (below 16.5) and 2 when the market is between 16.5 and 18.5.
So you get much more of a large step transition, that effectively averages around 25% cash when below the 16.5 line, 50% cash when in the mid zone and 75% cash when above the 18.5 line.
Regards. Clive.
Stocks/Bonds/Managed Futures