Skew Updated Chart

by Toni

The IV skew and vix divergence continues to signal further selling pressure. As discussed before the correlations are strong but not 100% on a day to day basis. Still further selling pressure does look highly probable.

I will note though a temporary buy signal may be approaching as noted on the chart below (two prior lows are circled). Over the past month there does appear to be a lag where the divergence leads the SPX so if in fact this “buy area” is reached there may still be further selling pressure.

Over the weekend I will update this chart with a longer time horizon to get a better sense of buy signals.

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