How to tell when this bull run is done

[ironchef]

IMHO Implied Vol is a derivative.
It has nothing of a leading indicator.

When market is going to break,
THEN you will see IV spiking upwards.

When IV starts to go up you anticipate market is going to break, isn't that a leading indicator?

 

[murray t turtle]

@murray t turtle, thanks for that.

agree, daily paycheck works

%%
I have gotten several check$ in one day -OK/LOL;
but once a week or more is fine also
WOW, WMT warned us hen eggs would increase+ jumped up about 100% in one week/$2.00+/. But I bought 50 lbs of chickenfeed + 4 little hens=practical pets...……………………………………………………………………………………………………………………………………...

 

[Sekiyo]

When IV starts to go up you anticipate market is going to break, isn't that a leading indicator?

No because you can clearly see the market is about to break. That’s why IV is high. Options traders can’t predict surprises.

 

[TheBigShort]

The market is not completely random. Here is a histogram of 25 years of SPY daily price change:View attachment 225175

If random, it would be a Gaussian (black line), but it is more a Levy/Laplace. Some professionals/institutions seemed able to exploit this but certainly not us mom and pop amateur retails. I don't know how to trade this information.

Normal univariate distribution does not mean random. Random means to chose without thought. For example - you randomly selected what underwear to put on this morning.

If we monitor which underwear you put on every morning over let's say 100 days, we can build distribution to give you a probability of what you will put on tomorrow.

Distributions describe the data. So depending on your data you would have different distributions. Continuing with our example above - If you have 9 different underwear of which all are different colors. Then the chance of you picking a blue one today will be the same as yellow, red or green. This would give us a uniform distribution. For stocks, we have a univariate distribution with fatter tails (also called excess kurtosis and skew).

I thought I would clear the air on that one. Univariate distribution != Random

 

[ironchef]

Normal univariate distribution does not mean random. Random means to chose without thought. For example - you randomly selected what underwear to put on this morning.

If we monitor which underwear you put on every morning over let's say 100 days, we can build distribution to give you a probability of what you will put on tomorrow.

Distributions describe the data. So depending on your data you would have different distributions. Continuing with our example above - If you have 9 different underwear of which all are different colors. Then the chance of you picking a blue one today will be the same as yellow, red or green. This would give us a uniform distribution. For stocks, we have a univariate distribution with fatter tails (also called excess kurtosis and skew).

I thought I would clear the air on that one. Univariate distribution != Random

Thank you @TheBigShort for the clarification. I always appreciate your comments.

This is what happened when a layperson tried to explain statistics. Clearly out of my league.

 

[Sekiyo]

Univariate is one variable.
If the only measure took for a coin flip,
Is actually the outcome of the flip (X) then YES,
It’s one variable with two outcomes (Head, Tail).

Random means 1/n (n as outcomes)
If a coin has 1/2 for head and 1/2 for tail,
It’s random because outcomes are equally likely.

 

[Matt_ORATS]

Watch the implied volatility, now back over 40% for SPY. If IV holds there, that could spell trouble for the market.

 

[murray t turtle]

Watch the implied volatility, now back over 40% for SPY. If IV holds there, that could spell trouble for the market.

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Some maybe front running sell in may=today.
Good time to take some UPRO profits----- I don't mind getting paid early on turnaround tuesday

 

[Sekiyo]

Watch the implied volatility, now back over 40% for SPY. If IV holds there, that could spell trouble for the market.

You’re late buddy