There is a lot of talk about a high skew reading at the end of last week. First thing’s first. We have to acknowledge that SKEW is not predictive of anything.
high skew = not predictive. only means ppl payed up for insurance.
— ParallaxFinResearch (@InterestRateArb) March 21, 2017
The tone from the media is always one of buzzwords like crash and doom.
However, spikes in SKEW has been more predictive of bottoms of late. Incredible right?
Based on the market technicals, this SKEW spike makes sense. Transports are diverging and vulnerable to a 10% decline. The Commodity Markets are historically unbalanced with bullish speculators and bearish producers. We see plenty of undeniable extremes in market sentiment.
Are the pros right for paying up for Portfolio protection? Only Time will tell.