Replies to post #39894 on A.I.M. Users Bulletin Board (AIMUSERS)

[OldAIMGuy]

Hi Allen, Re: Volatility and the v-Wave Oscillator...........

The v-Wave Oscillator isn't tuned into volatility by design. It may show a
large value during times of high volatility but might not.

Generally if P/E is dropping because the markets are currently out of
favor, you would expect to see a negative value for the Oscillator and the
v-Wave in decline as a risk measure. If you look at the underlying
component in Value Line, you'll find that "Price Appreciation Potential" in
Value Line is a combo plate of information that gives an idea of what the
3-5 year forecast is for stocks of the VL universe.

Low potential for appreciation corresponds to high cash reserve suggestions
from the v-Wave. The v-Wave is scaled somewhat to give a cash suggestion
that would be appropriate for US stocks if one were AIMing them. So, if the
v-Wave is dropping and the Oscillator is steeply negative, it is a good
indication that market risk is rapidly contracting. Volatility could easily
be 'up' during that same time frame, but is not measured or included in the
v-Wave as a component.