TVIX, UVXY - the horror...of the decay

With the indexs breaking above key resistance, and the VIX falling 12% into the mid 15s, both the 2x leveraged VIX (long) instruments felt the hammer of destruction today.


TVIX, daily

UVXY, daily

Summary

What more can be said..other than....'urgh'.
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The decay remains an absolute horror story for both of these leveraged stocks, and again I'd refer anyone to page'1 of the prospectus for both TVIX and UVXY.

*A reverse split seems likely at some 'imminent' time, probably a 1 for 10.

Both TVIX and UVXY have their legitimate uses in this market, but arguably for 'day traders' only. 

UAL - engines restarted

United Continental (UAL) had one mighty strong day, climbing more than 5% to the low 19s. This is however still a long down from the lofty heights of early July when the stock was flirting with a breakout over $25.


UAL, daily

Summary

Airlines remain one of the most turbulent sectors to meddle in. I've certainly not traded UAL in over a year, and even now I think its too unstable to be meddling with.

Yet in terms of entertainment, its proving to be quite good.

It is very difficult to say how long this new up cycle will last. The last one stalled after just a day, maybe this next one will get to 20/21, but it really is a tricky one to guess.

Considering the broader macro-economic picture - especially in the US economy, with the threat of recession in Q4/early 2013, the airlines seem the very last place where investors should be getting involved in right now.

ANR, BTU - deeper and deeper for the miners

Even though the broader market was mixed, the coal miners had another lousy day, and are continuing their horrific never-ending collapse. Clearly, they're not going to zero, but at the current rate of decline, 'zero' will be hit by summer 2013.


ANR - Alpha Natural Resources

BTU - Peabody Energy

Summary

Both ANR and BTU sum up the sector, and both significantly declined by around 7% and 3% respectively.

Considering that the US economy is not even in an official recession yet, it is remarkable to see the low valuations on what are unquestionably 'reasonable' companies, companies that actually provide a real resource that is useful for the global economy.

At some point they will floor in price, but it sure doesn't seem like it'll be this side of Christmas.

The sector as a whole is certainly one to continue monitoring, not least if there is a major Sept/November market correction - even if its just 7-10%.

How low can they go?  BTU still looks set to hit the 2008 low of $15, with ANR likely to end up somewhere in the 4s.

At those prices, it sure will be tempting.