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Volatility ETPs Finally See A Bounce Off All-Time Lows

Analyst Paul Weisbruch of Street One Financial brings us his daily fund flows update, which today sees volatility ETPs bouncing big off all-time lows, some new outflows from major equity funds, and finally some dip-buying in corporate junk bonds.

We saw Long Volatility ETPs like VXX and UVXY trade at new all-time lows once again this morning only to spike in short order as the equities markets quickly sold off. The VIX itself is now through $12 after trading with a $10 handle this morning — quite a turnaround and a development that’s worth monitoring.

Global equities are off sharply, and the SPX for instance is well off its 2400 handle registered at the beginning of the month. SPY itself has seen some assets trickle out this week, with about $1.8 flowing out of the fund, while QQQ has seen $1.3 billion leave.

On the other hand, in Small-Caps, which have been lagging lately we have seen some buying ahead of the huge dip in IWM (iShares Russell 2000).

In other flows, there has been a bit of a reversal in High Yield Corporate Bond flows in the last couple sessions, as HYG (iShares HY Corporate Bond), which has been hemorrhaging assets year-to-date. In the short term, about $675 million reappeared in the fund via creations on some dip buying.

The iPath S&P 500 VIX Short Term Futures TM ETN (NYSE:VXX) was trading at $16.11 per share on Tuesday afternoon, up $0.30 (+1.90%). Year-to-date, VXX has declined -36.85%, versus a 5.16% rise in the benchmark S&P 500 index during the same period.

VXX currently has an ETF Daily News SMART Grade of F (Strong Sell), and is ranked #4 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 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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