CBOE Skew Daily Chart

The SKEW remains at obscenely high levels. The expectation would have been that the June-July peaks were enough to create a short to intermediate term downtrend for stocks (weeks and months) but the bears were slapped in the face at the SPX 1905 bottom in early August when Russian President Putin started talking happy talk concerning Ukraine. No doubt the Russians had bot boatloads of calls on the market since they knew Putin's words would create big upside gains, which occurred.

The SPX catapults to an all-time high at 2011 a 106-handle gain for the rally based on Putin happy talk and then the new ECB QE easy money program anticipated and announced by President Draghi. The 2011 print nails the 1.24% Fibonacci extension retracement for the move down from the July top to the 1905 low.

The SKEW remains at nosebleed heights and it is surprising to see the complacent behavior continue so long. Then again, with long traders hooked on the Fed's easy money heroin, the complacency and market fearlessness makes sense. The Investors Intelligence sentiment survey just reported the bears at a paltry 13%. Everyone is long the market. The SKEW is very overextended above 130. The red circles show recent market tops all resulting in spank downs from 15 to 85 points; the large 85 point drop is the red arrow from the SPX 1990 top in July to the 1905 bottom in early August.

The SKEW is set up the same way as before the July market selloff. Also note that despite the stock market printing new all-time highs compared to July, the SKEW is elevated but off the July highs; a negative divergence. The negative MACD cross appears to be occurring just like in July so the ducks appear aligned again for another market sell off. Perhaps this one will lead to a broader based and more substantive selling move into the intermediate term (months) ahead. 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.