ETF Tip Of The Week: November 12, 2012
VIX, the S&P 500 Volatility Index, also known as the “fear index,” and VIX ETFs spike higher as U.S. equity markets swoon.
VIX jumped 5.8% this week as major U.S. stock indexes declined 2% on average in response to the post-election analysis of President Obama’s reelection, the approaching “fiscal cliff” and ongoing uncertainty in Europe. ETFs, Stocks Face Fiscal Cliff, Apple Bear and More
Stock indexes broke significant support levels with all three major indexes, the Dow Jones Industrial Average (DIA) the S&P 500 (SPY) Russell 2000 (IWM) and Nasdaq 100 (QQQ) all closing below their 200 day moving averages, the line widely watched as the demarcation between bull and bear markets.
The potential for lower stock prices points to higher VIX and VIX ETF prices ahead.
For the week, VIX climbed 5.8% and the most popular VIX ETN, iPath S&P 500 VIX Short Term Futures ETN (VXX) climbed 6.4%.
chart courtesy of StockCharts.com
In the chart of VIX, we can see how the index has popped above both its 50 and 200 day moving averages which puts it in a bullish configuration. Also momentum and relative strength are positive, adding to the bullish picture.
After putting in a multi-year low in the 14 range in September and October, VIX now seems to be in a substantial uptrend but still below its long term average in the low 20s.
Due to recent technical strength in VIX, weak technical indicators for major U.S. stock indexes, fundamental headwinds over the fiscal cliff and ongoing problems in Europe and market leading performance, iPath S&P 500 VIX Short Term Futures ETN is our ETF Of The Week and shows potential for still higher prices ahead.
Get Wall Street Sector Selector’s Free Newsletter to keep up with all the action in ETFs!
Disclaimer: The content included herein is for educational and informational purposes only, and readers agree to Wall Street Sector Selector’s Disclaimer, Terms of Service, and Privacy Policy before accessing or using this or any other publication by Wall Street Sector Selector or Ridgeline Media Group, LLC.
Related Posts
Disclaimer: The content included herein is for educational and informational purposes only, and readers agree to Wall Street Sector Selector's Disclaimer, Terms of Use, and Privacy Policy before accessing or using this or any other publication by Wall Street Sector Selector or Ridgeline Media Group, LLC.
