SKEW is above 130

Friday, the SKEW finally got into the 130+ level. Today, again, it closed above that level. This is a good indicator that volatility will increase in the next few days. With VXST up 21% today, that process has already started. A VIX move to 14 should be the first target.



With the increased volatility the market is under pressure. The RUT led the way down with a loss of 1.35%. The SPX recovered its heavy losses, but still finished down about 0.35%. The SOX was down 1.65% and IBB (a biotech ETF) was down over 2%. Banks were the hardest hit sector today, after they have led the market higher since the election, with XLF down 2.38%. This occurred even though Morgan Stanley posted is largest Q4 profit ever. It fell over 3% today.

As I mentioned last Thursday, we are entering a historically soft spot in mid-January. My SPX 2285/2295 call spread expiring this Friday is showing a profit and needs to be rolled on any up day.