🍔Breakdown in Earnings

Why we are cautious on the market right now

Once again, we were able to predict this week's (minor) selloff by using our key skew indicator. Here’s what we wrote last week to paid subscribers:

But that doesn’t mean the market can’t go flat for the next few months. This view is supported by the fact that Options Skew (our famous market peak indicator) has reached above-average levels, meaning the risk of a pullback is high.

-MktContext ”From One Bubble to the Next”, July 27

Skew has been one of our most accurate peak timing indicators. We’ve used it the last twelve months to predict (and avoid) several major selloffs including the recent one in April. Our market timing strategy works. So does this pullback progress into a major selloff from here? We'll answer that question in today's post. Let's get into it...

The rest of this article is for premium members. Today’s post covers:

• Pullback was overdue. What caused it and can it go deeper?

• Our take on the economy

• More trade deals

• Bad earnings continue

• Technical analysis