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Mixed Bag Market Momentum
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Mixed Bag Market Momentum

by The MoleSeptember 4, 2019

Gauging market momentum is as much art as a science in that you’ll probably always find charts that satisfy a particular directional bias. The trick lies in remaining as objective as humanly possible and to collect evidence from a diversity of sources. As many traders are starting to return from their summer vacations I thought it a good idea to get everyone a jump start on what’s going on.

And a great way to lead the conversion is with a long term view of the SKEW index which quite frankly blew my mind as I hadn’t looked at it for quite a while.

What is the SKEW and why should you care? Here’s the definition I lifted off Investopedia:

“The SKEW index is a measure of potential risk in financial markets. Much like the VIX index, the SKEW index can be a proxy for investor sentiment and volatility. The Skew Index measures perceived tail-risk in the S&P 500.”

Now I’ll be the first to note that the SKEW, albeit well intended, is a horrible index and has almost zero predictive quality. However – that said and looking at the big picture here – isn’t there something that sort of pops out at you?

I am referring in particular to the fact that thew SKEW was gyrating higher inside a pretty well defined channel during a ten year timeframe spanning between 2009 and 2018. Then it suddenly dropped like a rock last summer and has since worked its way lower.

In fact the SKEW is currently around 114 which it hasn’t touches since the aftermath of the 2008/2009 financial crisis. Let that digest in your mind for a second – despite all the bearish chatter you’ll find in the MSM the S&P 500 is trading a mere 100 handles below its all time highs.

At the same time SKEW is pinned at historic lows, which stands in stark contrast with what we are seeing on the implied volatility front. What gives?

Case in point – here’s the Implied Volatility Term Structure (IVTS) which is back in bearish territory and continues to rise. That is usually a medium bearish sign, especially if the BBs are rising.

Here’s the inverted chart which I to pin possible buying opportunities. Falling BBs here make it more difficult for quick sell offs to turn into a BTFD opportunity. What you want to see is a recovery from below the BB while it is rising, which according to this chart has a high probability of success.

Much more below the fold for my intrepid subs:

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About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at the usual social media waterholes.
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  • ridingwaves

    Conjecture – the market is being managed very aggressively, like no other time I have witnessed….to include 2007-11….

  • Julie 35 – 25 – 36

    Yes Cotton (BAL) moving higher SPX this a/m a gap up sold into and no follow thru.Thanks Chief for showing SKEW.Like you have not looked at Skew in a long time Excellent explanation
    JULIE

  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • http://gerb-reloaded.blogspot.com Gold_Gerb

    Starbuxs
    I’ll have the DeCaf
    https://finviz.com/quote.ashx?t=SBUX

  • ridingwaves

    what are the afraid of….all of the stick saves via tweets, stimulus, currency devaluation, fake news

    like Mole says, we are only a 100 pts off the top….its nuts….

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    I’ll tell you, but it’s a secret.
    😉
    The (veteran) investor has become much wiser in the past 18 years.
    You can bank on that.

    https://uploads.disquscdn.com/images/45551eeafaaa7b15184eb63b468ec9cdcfa5b7cc1b9c2256eb34a616f3d05905.png

  • Julie 35 – 25 – 36

    Defensive sectors XLU and XLRE outperforming currently. Not what the bulls desire
    JULIE

  • HD

    I’m looking left and would not want to be short that chart…. if you know what I mean…

  • HD

    we are finding the limits of governing via twitter. JMHO

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    anything could happen. but when it turns up?….everybody remembers 2001 & 2007. Let’s pray is it’s only HWB.
    😉

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    ..don’t forget that XVG. whatever a geometric thingy is.

    https://stockcharts.com/h-sc/ui?s=%24XVG&p=D&yr=1&mn=4&dy=0&id=p00346151914

  • Julie 35 – 25 – 36

    SPX https://uploads.disquscdn.com/images/5bde33cef30a4e1aab85245ef945164f7acd44da52a38e96b85f4cb495801b74.png Checkmate today at upper cloud. Needs a breakout above 2950 corroborated by MACD breakout of trend line resistance and RSI above 50
    JULIE

  • Darkthirty

    Mentioned that awhile back, you told me I was mistaken…

  • Julie 35 – 25 – 36

    One word GG Yes !
    JULIE

  • BKXtoZERO

    don’t forget FAGIX!

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    still soggy. kinda lines up with Mole’s intro.

    https://stockcharts.com/h-sc/ui?s=FAGIX%3AVUSTX&p=D&yr=3&mn=0&dy=0&id=p03190821381

    but maybe that’s (my) confirmation bias talking.

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    Oui, Oui, OUI.
    (I always wanted to ravish a french girl – if I could stop giggling)

  • Julie 35 – 25 – 36

    Guys What do you think ? TLT a possible pullback to 142 – 143 ?
    JULIE https://uploads.disquscdn.com/images/402837852381bb9aee27a080cc65817a4088dc9e40bd96f48238a8450fc0a0e4.png

  • http://www.quemango.com Herb InCebu

    So hard to believe the case a reversal to bull that it makes perfect sense. I would not want to be short the major indexes now.

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    can’t look left, bigger chart.

  • ridingwaves

    Maybe I’m coming around….

  • http://www.quemango.com Herb InCebu

    Not much to convince me it is ready to reverse.

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    if it makes sense, it’s likely a trap!
    but I do have my signal, bull or cow? remains to be seen.

    -GG https://uploads.disquscdn.com/images/5b26a9b866a9e8fcfa74daacf51dd0baae7a547b96582959ec0a03c97b9deade.png

  • Darkthirty

    The red pill can be painful, at times I wish I took the blue one

  • Julie 35 – 25 – 36

    UNG Continues higher I went out yesterday top of channel and 20.50 target Seriously Guys COTTON making a move and bought yesterday
    JULIE

  • http://www.quemango.com Herb InCebu

    I am short SAGE could still add more now.

  • ridingwaves

    its just not twitter moves, its chinese news propaganda, Chinese fed, european stick saves, currency devaluation (gold is highest ever against 72 of them) US fed moves….etc….although the twit of 2 phone calls by chinese delegation last week might have been icing on cake….

    its a nutty world…not just here..

  • ridingwaves

    I did get a load of silver before this last move, so there is positives…I’m a bit more aligned with your view than you would think….

  • Julie 35 – 25 – 36
  • http://www.quemango.com Herb InCebu

    I not have BAL is that supposed to be the cotton contract?

  • Darkthirty

    30% gold, 70% junk silver. All denominations, due to unknown exchange rate..

  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • Julie 35 – 25 – 36

    BAL is an ETN for Cotton It is thinly traded so my position is small Can make a few bucks trading it
    JULIE

  • Julie 35 – 25 – 36

    !ITTMSPX Needs a positive close above it’s 10 ema This is yesterday’s result and let’s see what today brings $BPSPX has crossed above it’s 8 ema and $NYSI has crossed above it’s 10 sma
    JULIE

  • Julie 35 – 25 – 36
  • http://gerb-reloaded.blogspot.com Gold_Gerb

    and now you bring out the ‘good stuff’.
    LOL.

  • http://www.quemango.com Herb InCebu

    Weekly looking parabolic to say the least. It is kind of building a base up there. Waiting for the next tweet or NFP Friday?

  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • http://gerb-reloaded.blogspot.com Gold_Gerb

    XLE looks promising too. maybe I got it right.

  • http://www.quemango.com Herb InCebu

    SBUX ss candidate. https://finviz.com/quote.ashx?t=SBUX&ty=c&ta=0&p=d
    I am still seeing more ss opportunities that long on stocks. Long COUP might be worth a try on this pull back.

  • Julie 35 – 25 – 36

    I usually trade individual stocks and commodities in lieu of the indices.SPX for our 401K’s
    JULIE

  • Julie 35 – 25 – 36

    IBD 50
    JULIE

  • http://www.quemango.com Herb InCebu

    SBUX retraced for ss. Allows a tight stop IMO.

  • http://iberianviews.blogspot.com/ catracho
  • http://iberianviews.blogspot.com/ catracho

    Once this “mess”resolves we should get a nice move either way – before the next “stalemate”

  • http://iberianviews.blogspot.com/ catracho

    Also watching FTSE – could be a classic re-test (maybe a false move up ) – the recent July high was lower high than May’s high.

    https://uploads.disquscdn.com/images/8326dda077d56facdcf16ce36e55e224ed1641e1c0542cd3fb6678d701bd4110.png

  • Julie 35 – 25 – 36

    VEEV A 3 month consolidation At an important support.ill buy on a daily reversal candle at this level
    JULIE https://uploads.disquscdn.com/images/b962db0168e11d56c1f1383cbfce163f35212789a017ff66efd721d91c7e5486.png

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    I’m not sure. but watch those small variables, they can make a big difference.

    https://uploads.disquscdn.com/images/40df9b91f670f20450c59615efb9fb78784f23c7d2550b849e990d8eecad4bc0.png

  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • Julie 35 – 25 – 36
  • http://gerb-reloaded.blogspot.com Gold_Gerb

    look farther left. it’s a bigger triangle!!
    [USO]
    https://stockcharts.com/h-sc/ui?s=%24BPENER&p=D&yr=1&mn=6&dy=0&id=p03681979536

  • Julie 35 – 25 – 36

    Well Yeah GG lol
    JULIE

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    Bigger triangles have bigger break-outs. It’s a law of physics.
    😉

  • Julie 35 – 25 – 36

    GG The angle of incidence equals the angle of reflection. Give a monkey a cue stick and he is bound to make a ball sometime lol
    JULIE

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    I’ve come to the conclusion, you are a blonde parrot.
    Random high vocabulary surprising statements.

    https://cdn0.wideopenpets.com/wp-content/uploads/2016/06/bigstock-Blue-and-yellow-Macaw-ara-Ara-105650030-770×405.jpg

  • Julie 35 – 25 – 36

    GG We must watch the all important aggressive sector XLY At an extremely exigent resistance level 120.50.$BKX could have a pop too
    JULIE

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    exigent? dam, put that thesaurus down honey. You’re going to hurt someone.

  • Julie 35 – 25 – 36

    It’s all upstairs wrapped under blonde hair. An Indian friend calls me “Yellow Hair” lol
    JULIE

  • Julie 35 – 25 – 36

    If the more aggressive sectors SPY were outperforming in lieu of the defensive sectors XLU and XLRE I would be more bullish.We must be very careful and vigilant long SPX We are not long SPX in our 401K’s yet.I don’t like it
    JULIE

  • BKXtoZERO

    I am holding. Long tvix from 16.5 and put on same yesterday at 19.3 or so. Also holding DRV from 27.5.

  • Julie 35 – 25 – 36

    BK What does Andre say about this market ?
    JULIE

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    time check.
    Zzzzzzz..

  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • BKXtoZERO

    He hasn’t given up on downward cycles but says if it goes past 50dma which was 2945 Sunday…then 2985

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    Julie, you are slipping. where is your bear news radar?

    https://www.cnn.com/travel/article/montana-black-bear-washroom-scli-intl/index.html

  • BKXtoZERO

    He also said it is manipulated. He is not that kind of guy either

  • Julie 35 – 25 – 36

    Sorry GG i have been remiss and derelict of duty Buck’s T 4 has been at Big Sky for very many years. A very beautiful lodge with excellent food Lone Mountain Guest Ranch also at Big Sky.LMGR is where the Obama’s had a staycation Montana Fish and Game do a great job
    JULIE

  • Julie 35 – 25 – 36

    GG Nearby is a hillside where there is a herd of Big Horn Sheep.You must be careful there as tourists will stop right in the middle of the road to watch and take pictures.Unreal to see the rams butt heads The area is north of Yellowstone Natl Park and encompasses the Lee Metcalf Wilderness.The Spanish Peaks are just slightly north.The entire area is habitat for Grizzly Moose Cougars Big Horn Sheep Mountain Goats Everything GG Spectacular In winter you can see avalanches
    JULIE

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    https://knpr.org/sites/default/files/public/styles/detail_small/public/images/story/a5tumbleweed.jpg?itok=bMd6sqn-
    please stop.
    my entire life is Burning man on the playa, without the drugs. Why do I live in this god forsaken hell hole? oh yeah. SNOW.
    LOL.
    Winter’s Coming

  • Julie 35 – 25 – 36

    GG The Southern Rockies are beautiful too We like the Southern Rockies AZ and NM very much.Also to the east of Big Sky and the Lee Metcalf Wilderness is the Wilderness Designate Porcupine Wilderness which is expected to pass Congress sometime in 2019 It’s an area as big as the Lee Metcalf and there will be two Wildernesses adjacent
    JULIE

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    So, what is your take on Wolf populations?
    a necessary evil to keep the herds healthy?
    something to be minimized, so more tourists take pictures?

  • Julie 35 – 25 – 36

    GG There is a lot of wolves in Montana. Montana Fish and Game has a controlled hunt to minimize their effect on other wildlife.Wolves left unchecked can drastically reduce elk herds and deer populations. They have it down to a “T” on number of permits issued.Remember that all issued permits are not filled.I recently read that Oregon has now an abundance of mating pairs.We have seen them hiking and hunting.A healthy adult male and female can run 100 miles without stopping Unbelievable animal GG
    JULIE

  • Julie 35 – 25 – 36

    We watched a documentary one evening on the Nature Channel Calling a guy a wolf is a compliment as wolves mate for life. The male plays a very vital role in raising the pups.When they select their mates in a pack other wolves respect their choices.The males always eat first BUT always leave enough for the females and pups. They take excellent care of mom and kids
    JULIE.

  • Julie 35 – 25 – 36

    SPY Volume rather weak going up into SPX resistance 2940
    JULIE

  • Julie 35 – 25 – 36
  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • Mark Shinnick

    I missed today but my buy for drv is looking close.

  • http://gerb-reloaded.blogspot.com gold_gerb
  • BobbyLow

    I’ve prepped as much as I can for Hurricane Dorian. If it’s like Matthew of 2016, we’ll get flooded with rain again. If it’s a few miles further out then maybe we’ll get lucky this time. I’ll know by tomorrow night or Friday morning.

    In the meantime, this is nothing new but there’s been excellent price action taking place in after hours and in pre-market. Lately on more days than not, it’s been game over by the market open at 9:30 AM followed by a little ebb and flow via stop runs during the day followed by more clean directional price action in after hours. I used to feel trapped to have to deal with overnight gaps but not anymore. 🙂

  • BobbyLow

    Hey GG. Looks like we have another rally going on in After Hours.

  • http://gerb-reloaded.blogspot.com gold_gerb

    +3
    Good eye Hawk-eye.
    30 pts.

    https://finviz.com/futures_charts.ashx?t=ES&p=h1

    this cow may turn out to be a bull after-all, LOL.

  • http://gerb-reloaded.blogspot.com gold_gerb

    I’ve been trying to plant subliminal hints to the baby-bears.
    😉
    https://youtu.be/KVqJ750fZmY?list=PLSdTHABvRazARe4scQB4vbMRmLef4hVdr

  • BobbyLow

    Amazing ain’t it? I caught a nice run and have been long since early this morning. I set a 5 Point Trail about an hour ago wanting to book it but it’s still breathing. LOL

  • http://gerb-reloaded.blogspot.com gold_gerb

    you are my trailing stop hero. I’m going to really try on this one.
    China Trade my @ss.

  • BobbyLow

    LOL

    I’m running on fumes now and I can’t stay up as late as I used to because I’m starting earlier. Thanks again for the idea. There I just got stopped +28 Points. I’m going to hit the sack. Have a great night GG.

  • http://gerb-reloaded.blogspot.com gold_gerb

    Night.

  • http://gerb-reloaded.blogspot.com gold_gerb

    Boo-Yah, yes the candle hasn’t finished yet.
    still mid-night worthy.

    https://uploads.disquscdn.com/images/067ae6cbca2e7c97a65fb28b007190f59748f7993101029ebdf4472310129e61.jpg

    Every bear position since Aug 01, is now underwater.
    can you hear the Slopers wailing, and gnashing their teeth from here?

  • http://gerb-reloaded.blogspot.com gold_gerb
  • Julie 35 – 25 – 36

    Go Cotton GG Futes up 30 If a strong trend day tomorrow should put !ITTMSPX above it’s 10 ema
    JULIE

  • http://gerb-reloaded.blogspot.com gold_gerb

    unless tonight was a ramp & camp.
    everything will be green tomorrow.
    unless it’s red. (TLT, GOLD, CASH)

  • Julie 35 – 25 – 36

    The SPY aggressive sectors better perform tomorrow to initiate a risk on scenario Tomorrow could be a bullish thrust
    JULIE

  • http://gerb-reloaded.blogspot.com gold_gerb

    bullish thrust, or bearish short cover??

  • http://gerb-reloaded.blogspot.com gold_gerb

    I can’t pull up the cotton futures /CT.

  • http://gerb-reloaded.blogspot.com gold_gerb

    tell me a secret..
    does Cyd name her piggies? just curious.

  • Julie 35 – 25 – 36

    GG All bullish moves begin with short covering What is imperative is follow thru If there is follow thru then bulls on board.Volume will personify
    JULIE

  • http://gerb-reloaded.blogspot.com gold_gerb

    yes, very very important.
    no follow thru?, oh just imagine the Shemitah September CARNAGE.

  • Julie 35 – 25 – 36

    Yeah GG She has names.(1) Jester (2) Macy (3) Beau
    JULIE

  • http://gerb-reloaded.blogspot.com gold_gerb

    JiM Beam.

  • Julie 35 – 25 – 36

    LOL
    JULIE

  • http://gerb-reloaded.blogspot.com gold_gerb

    Amazing what you can find on the Net.
    (Jim Beam bacon recipe)
    https://billofflair.wordpress.com/2014/06/24/jim-beam-bourbon-baked-beans-with-bacon/

  • Julie 35 – 25 – 36

    Hmmm ! Not sure about that GG Cyd met a nice guy … she likes him too. A school teacher that has joined our investment club.I knew right away the connection body language etc
    JULIE

  • http://gerb-reloaded.blogspot.com gold_gerb

    Judging from your wedding, can I expect invitations around Xmas?
    LOL.

  • Julie 35 – 25 – 36

    We were married in a fever GG I knew right away… as soon as he introduced himself lol
    JULIE

  • http://gerb-reloaded.blogspot.com gold_gerb

    yes yes, you’ve mentioned it many many times.

    The heart is a funny thing. Good hunting.

  • http://gerb-reloaded.blogspot.com gold_gerb
  • Julie 35 – 25 – 36

    GG It’s been glorious We have only had one argument and it was over discipline of our children.Sometimes was too lenient with the children.
    JULIE

  • http://gerb-reloaded.blogspot.com gold_gerb

    one? that’s disappointing. it means Grizz is winning. ‘all the time’.
    😉

  • Julie 35 – 25 – 36

    Absolutely not Looks like the cheating kind
    JULIE

  • http://gerb-reloaded.blogspot.com gold_gerb

    oh come on! he has a PhD in fluid dynamics and can’t change a car tire.
    don’t be so biased.
    LOL.

  • http://gerb-reloaded.blogspot.com gold_gerb
  • Julie 35 – 25 – 36

    Ditto on the NO !
    JULIE

  • http://gerb-reloaded.blogspot.com gold_gerb

    tease Cyd with that one. right after she returns on her date.
    😉

  • Julie 35 – 25 – 36

    Thickness of wallet is very low priority Kindness and sense of humor with manners is primo Honesty too ranks high. A guy just being himself with confidence
    JULIE

  • Julie 35 – 25 – 36

    We were fortunate GG When we were first married we had good jobs and able to buy a house right away.Saving for a family was easy No debts as I was able to pay for college and my parents helped with college too.Today a different story with the millenials
    JULIE

  • http://gerb-reloaded.blogspot.com gold_gerb

    that was a Golden Age.

    I pray for my children.
    http://www.your-boss-is-a-robot.com/images/thumbnails/waitbutwhy-ai.png

    may Skynet be just a bad dream.

  • http://gerb-reloaded.blogspot.com gold_gerb

    IMHO, corporations & governments are racing to something that should be careful of making. A digital God.

  • http://gerb-reloaded.blogspot.com gold_gerb

    It’s late, I leave you with this oldie, but goodie.

    https://www.youtube.com/watch?v=BoXu6QmxpJE

  • Julie 35 – 25 – 36

    GG The most important part of parenting IMO is Mom and Dad together.There must be a good husband and father in the house.Time again it’s been proven how important a father is with his children.
    JULIE

  • http://gerb-reloaded.blogspot.com gold_gerb

    agree. the State doesn’t want that. the State doesn’t want lots of honorable/wholesome things.

  • https://quanto.live QUANTO
  • Darkthirty

    still watching 2975-80 ES…….