VIX ETF Crumbles on Optimism (VXX, XIV, TVIX)

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VIX, the CBOE S&P options volatility index, crumbled along with VIX ETFs as optimism returned to world stock markets.

The VIX declined 4.6% today to 18.55 on renewed optimism over a potential Greek settlement and positive economic reports in the United States.

VIX ETFs followed suit with iPath S&P 500 VIX Short Term Futures ETN (NYSEARCA:VXX) declining 2.7% and the inverse VIX ETF, VelocityShares Daily Inverse VIX Short Term ETN (NYSEARCA:XIV) gaining 2.6%.

The leveraged form of the VIX ETF, VelocityShares Daily 2X VIX Short Term ETN (NYSEARCA:TVIX) declined 5.7% as it is designed to gain or lose at twice the rate (2X) of the underlying index on a daily basis.

VIX moves opposite to stock prices which were bolstered by a positive ADP Employment Report and ISM report and hopes for a resolution to the ongoing Greek debt crisis.  Often regarded as a predictive indicator of stock prices, VIX has been in a significant downtrend and is reaching major support levels which would indicate a rebound could be imminent.  Currently at 18.55, VIX (NYSEARCA:VXX) is at levels not seen since last summer and which have been major turning points over the last two years.

Bottom line: VIX watchers look at a chart of iPath S&P 500 VIX Short Term Futures ETN and see an exchange traded note that is oversold and near significant support levels.  A reversal to the upside here would spell lower prices ahead for stocks and ETFs.

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