Skew Update

With the mega squeeze the market put in for the past days, we are approaching short term resistance. If you picked um some “dirt cheap” stuff at the bottom, don’t be too greedy…The IV Skew Divergence by Macro Story, is once again showing some disturbing patterns, and suggests the market should turn lower shortly.

Guest Post by Macro Story;

Once again we see divergence between the SPX and the implied volatility skew. In other words Monday’s rally did not quite pass the “smell test.” In fact in really stunk.

IV Skew VS SPX

Notice the divergence once again which does not support Monday’s rally. One data point is not enough to completely throw water on the “rally” but we have seen this before and it has resulted in the SPX correcting. Something to keep an eye on. Additionally with markets up so much the VIX at such elevated levels should have been down more than 5% on Monday.

Skew Vix Divergence VS SPX

Similar to the skew we have a divergence once again. Additionally the skew vix divergence put in a new low signaling its trend should continue lower further pressuring the SPX.