VIX ETFs Hit Second Bottom: VIX Rebound On Horizon?
VIX ETFs finished confused and the VIX Index bounced off bottom again, are we looking at higher prices ahead?
The VIX Index bounced off of bottom and VIX ETFs finished confused, perhaps indicating the end to lower prices ahead. Whether or not the VIX will rebound is entirely up to how equity markets perform in the next few days.
The VIX Index rose 1.57% to close at 13.57, the iPath S&P 500 VIX Short Term Futures ETN (NYSEARCA:VXX) lost -1.40%, while the VelocityShares Inverse VIX Futures ETN (NYSEARCA:XIV) gained 1.48%.
Typically the VIX ETFs track directly with the VIX Index, however today’s discrepancies are likely a result of tracking errors and possible correction forces. Considering that the VIX Index and VIX ETFs have fallen over 40% over the first two weeks of the New Year, a correction is due soon, especially if equity markets fail to break into new highs. With the S&P 500 within 100 points of an all time high last week and with the Russell 2000 Index reaching its high of 881 last week, investors are wondering if indeed the bulls will break loose and create a new bull market. ETFs On The Verge Of A Breakout?
From a fundamental perspective, if the bulls do break loose, a 13 for the VIX might be a distant, good memory. More likely however, the resistance that equity markets face right now likely will trump the bulls, which would likely result in a VIX and VIX ETFs rebound. Of course, time is the only true indicator of what will happen to the VIX and VIX ETFs.
VIX ETF Update:
Volatility Index – New Methodology (VIX): Index: 13.52, +1.20%
iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX): -1.21%, This ETN is designed to track volatility in the markets as measured by the Chicago Board Options Exchange Market Volatility Index (CBOE Index), a popular measure of the implied volatility of S&P 500 index options. The CBOE Volatility Index is also known as the “fear” index or “fear” indicator in markets. The iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX) prices itself off of the average and implied volatility of the first two months of futures contracts of the S&P 500 Index.
VelocityShares Daily 2X VIX Short-Term ETN (NYSEARCA:TVIX): -3.74%, This ETN is designed to track 2X return on volatility in the markets as measured by the S&P 500 VIX Short-Term Futures Index. The S&P 500 VIX Short-Term Futures Index measures the volatility of the S&P 500 Index via futures contracts as traded on the CBOE. The CBOE Volatility Index is also known as the “fear” index or “fear” indicator in markets.
iPath S&P 500 VIX Mid-Term Futures ETN (NYSEARCA:VXZ): -1.26%, This ETN is designed to track volatility in the markets as measured by the CBOE Volatility Index futures contracts. The CBOE Volatility Index is also known as the “fear” index or “fear” indicator in markets. The iPath S&P 500 VIX Mid-Term Futures ETN (NYSEARCA:VXZ) is priced from the average volatility of the 4th through 7th month futures contracts of the S&P 500 Index as traded on the CBOE.
S&P 500 Dynamic VIX ETN (NYSEARCA:XVZ): -.60%, This ETN is designed to track volatility in the markets as measured by the S&P 500 Dynamic VIX Futures Total Return Index. The S&P 500 Dynamic VIX Futures Total Return Index seeks to combine results of volatility of the S&P 500VIX Short-Term Futures Index Excess Return and the S&P 500 VIX Mid-Term Futures Index Excess Return to create an accurate market volatility reading, as measured by the CBOE. The CBOE Volatility Index is also known as the “fear” index or “fear” indicator in markets.
Velocity Shares Daily Inverse VIX Short-Term ETN (NYSEARCA:XIV): +1.48%, This ETN is designed to inversely track the volatility in the markets as measured by the S&P 500 VIX Short-Term Futures Index. The S&P 500 VIX Short-Term Futures Index measures the volatility of the S&P 500 Index via futures contracts traded on the CBOE. The CBOE Volatility Index is also known as the “fear” index or “fear” indicator in markets.
Bottom Line: The VIX Index and VIX ETFs did not track together today, although it appears that both the VIX Index and VIX ETFs have hit bottom and are due for a slight correction. If equity markets explode and move into bullish territory, the VIX and VIX ETFs are likely in for more declines.
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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.
