Long Volatility ETPs Obliterated Amid Renewed Equities Rally

Analyst Paul Weisbruch of Street One Financial brings us his daily fund flows report, which today points out rather ho-hum money flows heading into month-end, along with the continued destruction of volatility-focused ETPs as stocks rally hard to the upside.

Inflows in the ETP marketplace have been rather light heading into the end of April, and a new trading month beginning next Monday, especially in equities. In fact, the largest recipient of inflows on new highs in such indices like the Nasdaq Composite is GLD (SPDR Gold, +$700 million in).

With another pivotal week or so of quarterly corporate earnings reports expected (AAPL 5/2, FB 5/3, for example) as well as anticipated first of the month model changes that will likely hit the marketplace next Monday on 5/1, it will be interesting to see if equity inflows continue to stall here in the face of a global run-up.

In other trading, VXX (iPath S&P 500 VIX Short-Term Futures ETN) has seen some stopping out (- $300 million out) as the fund has plunged to new all-time lows once again amid a precipitous VIX plunge. The VIX itself is trading with a $10 handle just days after trading in the $15-$16 range.

We need to point out that the fund and other long Volatility front month future based funds like UVXY (ProShares Ultra VIX Short-Term Futures ETF) and TVIX (VelocityShares Daily 2X VIX Short Term ETN) are in rare backwardation in the past couple sessions on the more than 50% cliff-dive in the VIX.

The iPath S&P 500 VIX Short Term Futures TM ETN (NYSE:VXX) was trading at $15.12 per share on Tuesday morning, down $0.25 (-1.63%). Year-to-date, VXX has declined -40.73%, versus a 6.73% rise in the benchmark S&P 500 index during the same period.

VXX currently has an ETF Daily News SMART Grade of D (Sell), and is ranked #2 of 11 ETFs in the Volatility ETFs category.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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