Thursday 20 December 2012

TVIX, UVXY - two consecutive up days

Whilst the main indexes closed moderately higher, the VIX still managed a slightly higher close in the high 17s. Both of the 2x leveraged bullish VIX instruments TVIX and UVXY closed higher by 5.4 and 3.7% respectively.

TVIX, daily

UVXY, daily

 VIX, weekly


It says something about the recent level of volatility that two consecutive higher closes merits a post.

The VIX almost broke the 18 level today, but comfortably closed in the upper 17s. The key threshold remains the big 20. A few daily closes >20, and we should see some major explosive moves to the upside.

Short term hyper-spike in 2013..but long term decay.

Even if my original bearish outlook for equities (low sp'1200s) comes to pass - whether its early January, or a few months further out. the VIX will very likely spike into the 30s..or 40s.

Both TVIX and UVXY would probably double..or even triple up, but the long term trend of course is the same...relentless statistical decay.

As ever..such instruments are for short term trading only.