VIX, VIX ETFs Jump, Bounce Off Support (VXX, XIV, TVIX)

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VIX, the CBOE “fear indicator,” jumped today on renewed fears of a potential Greek default and bounce off significant technical support.

VIX and VIX ETFs jumped today with the VIX adding 3.9% on renewed fears over the possibility of a Greek default on its debt.  Talks that were supposed to be concluded over the weekend now drag on into Tuesday and world markets are getting nervous.

VIX also is near major support levels that haven’t been broken in 3 years and so the likelihood of rising VIX grows on both a technical and fundamental basis.

Major VIX ETFs Decline

iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX) declined -1.1% as VIX rose and fear re-entered the market.

VelocityShares Daily Inverse VIX Short Term ETN (NYSEARCA:XIV) added 1.2% as the ETF moves inversely to VIX and so gained as VIX fell.

VelocityShares Daily 2x VIX Short Term ETN (NYSEARCA:TVIX) the 2x leveraged VIX ETF handed aggressive investors a 2.3% decline as VIX bounced off long term support levels.

VIX is near historic lows and below its 50 and 200 day moving averages.  The index is vastly oversold.

Bottom line: Technical indicators point to an ongoing bear market for VIX and VIX ETFs, however, short term oversold conditions along with growing fear over a potential Greek default set the groundwork for a rally in VIX and a corresponding decline in stock prices.

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