Volatility Surges 6%, Looks to Snap Incredible Losing Streak

vix-fearYesterday, we pointed out that the iPath S&P 500 VIX Short Term Futures TM ETN (NYSEARCA:VXX) had posted losses in 19 out of the previous 20 trading days. Well, a snap-back was probably inevitable.

And a snap-back rally is exactly what we’re getting today, with the VXX surging 6% in morning trading. All of the major U.S. indices are down, and investors are even selling bonds as well. This action has temporarily injected a bit of fear back into the markets.

For at least today, volatility reigns supreme. Whether this is the start of a sea change in the markets or simply a one-day blip in the relentless march higher in bonds, commodities, and equities remains to be seen.

The VXX has still lost 47% year-to-date, as investors have thus far ignored negative news — perhaps even embracing bad news as good news, because it means more government intervention (and thus is ultimately bullish for equities). The result is a steadily declining level of volatility as measured by options futures contracts — and a steadily declining share price for VXX.


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