The Turning?

Markets begin the "3 Point Turn"

If you have a drivers license, you have made a 3 Point turn. There are three points in market terms that I’m using. Lets take a look.

Yield Curve

This morning as I am writing this, the Yield Curve is at -1.02%. The last time the Yield Curve was at this point was March 7, 2023. What happened in March? Bank blowups. This low of a Y. C. is not good.

Skew

#SKEW is a measurement of Large Institutions hedging their portfolios from Tail end risk. Complicate I agree. It could be seeing as a forward looking indicator to what is to come in equity markets. Looking at the chart below, you can see that SKEW turns before the SP500 in this case.

Greed Index

Not a scientific indicator, yet the Greed Index, this one being from CNN does give you a glimpse into how people are feeling about markets. Taking a #contrarian approach, this index is telling me that people have begun to let their guard down. Last week this index was in the Extreme Greed section. As the equity markets have sold off last week, the indicator has dropped.

Conclusion

I believe last week market the shortness of breath in the equity markets. Through in the short Russia Cue attempt that spooked oil prices and you have yourself a turning in markets. Look for extreme rates of change as we have seen in the SKEW index and sizeable ROC in the Yield Curve. Forward thinking is the approach.