I repeat, short VXX/UVXY is a great hedge for a trader who is short the market. It doesn't get any better than today. This is the american dream! A great day for this trader! Way to go BenB. Sock it to the market with your QE or not to QE. Now, any growth in economy will result in market selloffs. If the housing market gets on a roll, which is happening right now, expect a little volatility.
But, as the market tanks, does not necessarily mean that VXX will rise! Just keep that in mind, and recall what VXX did today!
The reason VXX was almost flat was that VIX futures were almost flat.
On a normal day (i.e. no Fed announcment) with a 200-point Dow drop, we would have seen VIX futures rise 3 - 5%, causing VXX to rise. So, the question is why did the VIX futures stay flat ?
My guess is : The VIX futures were already elevated a bit due to the anxiety surrounding an adverse Fed announcement. There was a relief of that anxiety, which counterbalanced the effect of a market drop, causing flat VIX futures.
I guess we are going to go back to more normal VIX future pricing (18 - 22 range) gradually. Hence there may be a rising or flat VXX for some more time, and then it will start to gradually fall again.