We are clearly in this trading channel and have recently challenged the resistance level and testing the imminent uptrend since Aug. last week. It still survived the first attack but should try once again even this but more likely next week with a positive drop below. The Apple recovery is one of the factors plus the month end window dressing but even more so the return of the retail investors to the stock-markets this year. We have a weekly Golden Cross in the DOW and about to in the SPX which ironically is most of the time an indicator for an imminent counter-move of at least 5%.. We have a little time window of 2-3 days where Venus will be in a benign sextile to Uranus while it moves into a new sign (Aquarius) which is again a perfect timing of Apple to launch a new product ( might not be a coincidence at all) which could drive Apple stocks to the 360 levels once again.SPX could test the 1350 level before turning down within this context as we now enter month 7 count with a 13 which means that the top could take a few more weeks to be finished. but with a 10% correction in between as the bigger tops have this wild distribution patterns. As the FED and the other banksters keep the ponzi-rally going with an unprecedented liquidity infusion some indicators seem to be irrelevant but its rather more a matter of delay and rather worse outcome.
From Credit Trader
CBOEs recent introduction of the SKEW Index brings the realities of the options market (and real fear indexes) to retail investor's eyes. With so much attention paid to the VIX (the anachronsitic FEAR index) and especially its dropping over the last few months, investors are led to believe that risk is reducing but lo and behold, as many Pros know, the cost of protecting against a much more serious drop (or tail event) has increased quite notably with out-of-the-money options vols rising notably. The chart below shows this quite clearly as VIX (At-the-money vol) ebbs away (red arrows) as the day-to-day vol of more 'normal' mark-to-market movements is culled thanks to the liquidity fueled effervescence, the rise in out of the money (or crisis/event risk) vol has risen dramatically (white arrows). This can only go on so long as vol arbitrageurs will creep up the moneyness curve (to hedge the tail risk) and eventually impact the ATM. This happened in early 2010 and is happening again currently.
The recent moves in the major credit indices also fits with this world view as any smarter-than-the-average bear capital structure arbitrageur knows that the skew (and specifically the out of the money vol market) has a much better relationship with credit than the near-the-money. One other potential way to think of this (hattip to Artemis recent article on this) is that the skew better represents the real market value of the Bernanke Put (i.e. how much is the market pricing in the never-ending story of a Fed-provided safety net) - perhaps notable that the SKEW began to rise very shortly after Jackson Hole and the QE2 plan came online.