Sell off

The overnight pressure to the downside carried through to the morning session with a strong sell off across all indexes within the first hour. The indexes took the rest of the day to fight some of that off. This is not going to be the end of this sell off, however, as the SKEW rose today to 134+. Meanwhile, VXST traded higher than VIX several times today, marking more volatility is coming. The VIX is still extremely low.

There is good reason to believe that the recent high on the NDX will hold for sometime. The RSI is falling back out of the upper extremes. Today's candle was an ominous retracement to the breakout area, which is holding as very short term support right now. The Double Smoothed Stochastics are also very high on the chart and could start rolling over soon.

I traded out of some of the NDX spreads today. I bought the NDX Feb2 5160/5170 back for $2.20 and the 5160/5175 spread for $2.85. Having brought in a credit of $1.05 originally, these trades are manageable losses.

I still have the NDX 5140/5150 trade in place, along with the SPX 2185/2195 calls. If needed, I will roll these out further.

In the meantime, I may buy some VIX call spreads on the open, just to take advantage of the high SKEW.