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Your confusing two very important concepts.
Take any year in history either with a implied number(1983 - 1996)or
simulate actual volatility.
Can you find a year where the market had a positive rate of return and
ended the year with a higher vol than the previous year?
Go all the way back to 1945(Morgan Stanley did a study and you can
probably get it from a Dean Witter broker)and you will find in more than
9 out of 10 years positive rate of return in the market occuring in
years where you record lower high in vol and lower lowss.
Using vol to correlate to short term movement and demonstrating coupling
says nothing about the absolute trend.
Is vol higher today than last year?
Has there been a higher high? Yes it was hit on Friday....it took out
the prvious high in 1990?
How many times has that occurred and the market ends with a higher high
than the prvious year? If you look at the lasst 51 years it occurs less
than 1 out 10 years years.
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