How to tell when this bull run is done

[Matt_ORATS]

So in layman's terms you're saying the implied volatility is rising now expecting volatility to be higher in the future? When it breaks out of its range it means it expects the vix to spike thus the mkt will fall?

Not quite. IV has been falling and supporting this bull run. If implied turns and breaks the down-trend, that would be bearish.
Also, as mentioned, earnings are going to be a bigger deal than people realize. The firms reporting now are historically not very good for options straddle holders, ie they don't surprise much. However, as we get into weeks 3 & 4 I expect some earnings fireworks and more volatility for the market.

 

[Scataphagos]

By the time anyone concludes ANYTHING... (bull market over?... correction starting/over?...new bear market?) it will be waaaay past the turn. Only way you're going to "catch it", is to make a fortuitous guess... which, while strategically possible if you understand TA.... odds of doing so are not with you, regardless. (Doesn't mean you shouldn't try... just be cautious about "betting the ranch".)

 

[murray t turtle]

earnings are not good. i dont know how we keep going up. except a select few.

%%
SPY is below 200dma = bearish. TWM is going up= bearish.
Its also easy for SPY/QQQ to go up /uptrend ; market looks ahead 6 month + OCT is a bear killer-usually LOL...............................................................................................................

 

[Matt_ORATS]

By the time anyone concludes ANYTHING... (bull market over?... correction starting/over?...new bear market?) it will be waaaay past the turn. Only way you're going to "catch it", is to make a fortuitous guess... which, while strategically possible if you understand TA.... odds of doing so are not with you, regardless. (Doesn't mean you shouldn't try... just be cautious about "betting the ranch".)

Agreed, it is tough to catch a turn. But today is a good sign, IV up to 37% after bouncing off 33% yesterday. If this holds the down-trend in IV may be over and a headwind for the market.

 

[Genevian Speculator]

the market can also grind down or up. I find it dangerous to trust an indicator as an indicator shows the PAST. Price Action thou... if we close below 280 and even 260 the bull run is over earliest, not before. And if we ever close below 240 its going to get ugly.

 

[JBuck]

if it breaks this down-trend, this bull run of ~25% may be over.

Or may not be over. To be honest I've never met anyone who can predict what the market is going to do during the next minute, next day, next week, etc. Not by using fundamental analysis. Not by using technical analysis. The markets are random. And I certainly wouldn't recommend to anyone that they pay $299.00 a month for your "proprietary data, including forecasts, implied summarizations, and historical volatility readings." Unless of course you have a proven track record of success and 20-30 years of data to back up your claims.

Best

J B

 

[VolSkewTrader]

Implied Vol

Agreed, it is tough to catch a turn. But today is a good sign, IV up to 37% after bouncing off 33% yesterday. If this holds the down-trend in IV may be over and a headwind for the market.

Implied Vol (IV) can keep coming in if we become rangebound, and not really explode like you expect if we just grind lower in the stock market. The Fed has effectively put a lid on equity volatility with their unlimited bid in the corporate and high yield market. We will need a credit event and some high profile bankruptcies along with some shock-and-awe earnings disappointments in order for us to start gapping lower again with velocity, which is what really drives IV higher.

When the short gamma players can't stay ahead of their deltas because futures and equities are gapping lower or higher, that is when when vol explodes (on the downside) and stays bid (even on rallies). It's not all based on just direction of the underlying.

 

[ironchef]

%%
SPY is below 200dma = bearish. TWM is going up= bearish.
Its also easy for SPY/QQQ to go up /uptrend ; market looks ahead 6 month + OCT is a bear killer-usually LOL...............................................................................................................

What about TSLA? %%% Not a prediction.

I kicked myself for not trading TSLA.

 

[Matt_ORATS]

Implied Vol


Implied Vol (IV) can keep coming in if we become rangebound, and not really explode like you expect if we just grind lower in the stock market. The Fed has effectively put a lid on equity volatility with their unlimited bid in the corporate and high yield market. We will need a credit event and some high profile bankruptcies along with some shock-and-awe earnings disappointments in order for us to start gapping lower again with velocity, which is what really drives IV higher.

When the short gamma players can't stay ahead of their deltas because futures and equities are gapping lower or higher, that is when when vol explodes (on the downside) and stays bid (even on rallies). It's not all based on just direction of the underlying.

Yes. In 2008 after the initial drop and small recovery, the market grinded lower on lower IV.

 

[ironchef]

The markets are random.
J B

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

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.