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    Volatility Reports 6/18/21

    June 18, 2021

June 18, 2021

Volatility Reports 6/18/21

If you are not paying attention to Volatility Reports, you might be SKEWED.

SKEW is similar to the VIX index, but instead of measuring implied volatility based on a normal distribution, it measures an implied risk of future returns, realizing outlier behavior. The index model defines an outlier as two or more standard deviations below the mean, characterizing a black swan event or market crash. The index value typically reflects the trading activity of portfolio managers hedging tail risk with options to protect portfolios from a large, sudden decline in the market. A SKEW value of 100 indicates the options market perceives a low risk of outlier returns; values increasing above 100 reflect an increased risk perception for future outlier event(s).

The featured chart shows that the SKEW data viewed through the %BB-Oscillator is at historical highs. A reading that the big boys with their ear to the ground hear the train coming. They expect an event and a large and or prolonged negative reaction to the event. It may be a black swan; it may be something so overlooked that no one believed it pushed the market over the trend following the cliff.

According to the MarketMap-2021 cycles, that change is changing the trend from sideways to down, and a final peak in the NASDAQ 100.

In opposition to the pros, the retail trader has no fear, not a thing to worry about. The economy is coming back, inflation is only transient, and fiscal spending is a boom for real growth and GNP, therefore a boom for the market. The Dow has declined 3.5%, and the %BB-VIX has nearly moved, as seen in the left-hand window in the following chart.

Our friends at the chart factory SentimenTrader pointed out the same emotional background as the VX data above. He points out that it seems as if there are “…no worries whatsoever from the numbers.” 

As the chart describes over the last 12 months, the few minor selloffs could only their sentiment indicator to 18%, which, based on their methods, is not the pessimistic territory. But what provides iron-clad evidence is no core indicator that makes up the composite showing pessimism over the past week. From a Contrary Thinker point of view, that’s not bullish, my friend.

With my Market Map-2021 COTs hitting on Monday, as pointed out last Friday, the call was for lower prices into the end of July. Thus far, the action has been bearish; the Cash S&P has traced out a clear five waves down with a clearly defined 4th wave triangle, which is not forming resistance (highlighted in blue.)

The left window is the daily bar showing where S-T support is and where breaks would call the market lower. TEM is on rule#2, supporting a trending condition.

Here is one way to access the group, the “Volatility Reports” newsletter and MarketMap-2021 Scenario, planner. 

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