Friday, 21 March 2014

TVIX, UVXY - heavy weekly declines

With the VIX declining by -15.7% this week, the 2x lev' (bullish) VIX instruments of TVIX and UVXY saw heavy net weekly declines of -11.7% and -13.1% respectively. However, if VIX has floored in the 13s, then next week should offer some significant upside.

TVIX, daily

UVXY, daily


*first, an update on the VIX weekly

Most notable in the above chart, we have a general series of higher lows since the early Jan' low of 11.81. This is certainly somewhat interesting, since equities have still managed to push from the earlier high of 1850, to 1883.

As for the 2x instruments, it has certainly been a rough week for those holding across the entire week.

The equity rally of Mon/Tuesday was expected, although even I was somewhat surprised to see VIX back in the 13s, not only ahead of the FOMC, but even this Friday morning.

What is clear, with each day we move forwards this spring, the odds swing increasingly in favour of the equity bears/VIX longs. However, it will not be until late April/early May that the bulls will face a concrete wall. 

As ever...such lev' instruments are for short term holds only, the decay remains the incessant problem for holds more than a week or two - as this past week also illustrates.