CBOE SKEW Index Daily Chart Signals Significant Market Top

Start buying canned goods and store water in the basement as the SKEW runs wildly higher above 140. A reading of 100 shows a calm market but as the SKEW increases so does the chance that an extraordinary event will occur, a black swan, or other such turmoil that sends the stock market into a tizzy. The green circles show recent market bottoms and the red circles show recent tops. For many of the inflection points, the SKEW is peaking before or coincidentally with the market top and bottoming out ahead of or coincidentally with the makret bottoms making it a very attractive signal to monitor.

What is it saying now? Obviously the chart says 'watch out'. A market selloff would be expected going forward. The top to start the new year (double circle) results in a drop of 110 SPX points and the late March-April quick drop results in 85 points of downside. Thus, the expectation is for an 85 to 110-handle drop in the SPX from this current uber high SKEW print (SPX has peaked or will in the coming days or week or two). The recent SPX top is 1968 so the downside target is 1850-1880. Watch your wallet. Also of interest is the green line since as a rule of thumb, using the recent lows as a guide, it appears unwise to buy stocks on the long side until the SKEW drops under 125 and preferably lower. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.