The VIX Index and VIX ETNs soar as stocks and ETFs fall
VIX, the CBOE S&P 500 Volatility Index, also known as the fear indicator, jumped 13.72% today in response to the broad based sell off in U.S. equity markets on Monday. The VIX Index closed at 14.67, up sharply from recent levels but still below its long term average of 20. It still remains below its 50 and 200 day moving averages and on multiple sell signals.
The VIX Index moves inversely to equities and so found new strength today as fear returned to U.S. markets.
The Dow Jones Industrial Average (NYSEARCA:DIA) closed above 14,000 on Friday for the first time above that level in more than five years (October, 2007) and the S&P 500 Index (NYSEARCA:SPY) gave up the 1500 mark, a level also reached on February 1st for the first time since late 2007.
Major U.S. stock indexes were very oversold and were due for a correction and fundamental factors including the upcoming government spending debate added to renewed fear in the markets.
Before today’s sell off, major U.S. indexes were up in the range of 5-6%, and even after today’s drop, the S&P 500 Index (NYSEARCA:SPY) is still up 4.8% year to date. Read “U.S. Index ETFs and Stocks Defy Gravity”
VIX ETF Update:
iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX): +6.89%, 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): +11.22%, 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.