The low VIX:VXV ratio with the SPX at a new high

Examining the VIX:VXV ratio is a concept I first heard from Bill Luby at VIX & More.  The VIX is a measure of short-term (30-day) volatility expectation and the VXV measures intermediate-term (93 day) volatility expectations.  The ratio right now is quite low - a little below 0.85.  This means that short-term volatility expectations are substantially below intermediate-term volatility expectations.  When readings this low coincide with 50-day SPX highs it suggests a possible bearish edge for the next day.  This was demonstrated in a study that the Quantifinder identified yesterday afternoon.  It last appeared in the 1/13/11 subscriber letter.  I updated it last night.  Below is an equity curve showing a 1-day holding period for this setup.