VIX Volatility ETFs Fall as Dow Tops 14,000

ETF Trends

Volatility-linked ETFs greeted February with another backslide while in U.S. stocks the Dow Jones Industrial Average rose above 14,000 for the first time since 2007.

The iPath S&P 500 VIX Short Term Futures ETN (VXX) was down 6% in afternoon trading Friday and on track for a slightly weekly decline.

Other volatility ETFs include VelocityShares VIX Short-Term ETN (VIIX), VelocityShares Daily 2x VIX Short-Term ETN (TVIX), ProShares Ultra VIX Short-Term Futures (UVXY) and ProShares VIX Short-Term Futures ETF (VIXY).

Meanwhile, the Dow was set for its fifth straight weekly gain with a 0.8% advance for the past five sessions. The S&P 500 was poised for a 0.7% weekly gain in afternoon dealings Friday, while the Nasdaq Composite climbed 1%.

The Dow was up nearly 150 points on Friday despite a weaker-than-expected January employment report.

“There’s a lot of money looking for a home and people are finally deciding the bond market is done and moving money into equities,” said Edward Simmons at HighTower in a Reuters report. “I see the rotation (of assets) pushing the market up in the face of not-massive amounts of good news. People are overlooking the higher risk in equities.”

Commodity ETFs were actually some of the week’s best performers even though the five-year high in U.S. stocks dominated the headlines. Oil-related funds, base metals, copper and sugar led the way in commodities.

The top three unleveraged ETFs this week were U.S. Gasoline Fund (UGA), PowerShares Dynamic Energy Exploration & Production (PXE) and iShares MSCI Philippines (EPHE) with gains of 4% or more.

The bottom three unleveraged ETFs this week were iShares MSCI Spain (EWP), U.S. Natural Gas (UNG) and iShares MSCI Turkey (TUR). They were down at least 3%.

Next week’s economic data features reports on factory orders, ISM non-manufacturing, productivity and labor costs, consumer credit and the trade deficit.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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