TVIX, UVXY - 70% lower in three months

With the end of the first quarter, its a sideline curiosity to note the decay and destruction seen in the 2x leveraged bullish VIX instruments. TVIX and UVXY both declined over seventy percent in Q1, whilst the VIX itself slipped from 18 to the 12s...a drop of around 30%.


TVIX, daily

UVXY, daily

Summary

First, keep in mind the VIX across the last few months...

VIX, weekly

The little spike at the end of 2012 - VIX 23.23, now seems a long time ago. Even the recent spike into the 19s was ever so brief, and we're now back in the lowly 12s. So..what next?


Best guess

The index count is highly suggestive of a retracement to at least the sp'1470s in April/May. The big issue is what would that mean for the VIX ?

Can the VIX at least make a brief spike into the 20s ? I am very uncertain of this. Its very possible that if the indexes are very slow to decline, even if the market can slip to the 1470s, the VIX might only reach the high teens again.

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As for TVIX and UVXY, they certainly look exhausted on the downside - with a market arguably very close to a top, they won't likely fall much further.

Yet, as I noted at the start, the declines across the past 3 months are indeed the greatest reminder that these leveraged instruments are for short term holds only.

But then..everyone knows that...right?

AAPL - backtesting old resistance?

Apple (AAPL) closed just under 2% lower @ $452, and was one of the major depressants in the Nasdaq today. Yet, despite today's decline, AAPL could merely be backtesting the old resistance/channel line. So long as AAPL can hold the 450s by the Thursday close, trend is up.


AAPL, daily

Summary

Suffice to say, AAPL is on the edge, but it is still successfully holding above the key declining resistance from the Sept high.

Underlying MACD (blue bar histogram) cycle is ticking lower, and is certainly on the high side, so this is most definitely not the best of buying levels.

With increasing attention on Blackberry (BBRY), AAPL is going to need to step up a little to keep its huge global customer following intact.

Its going to be a really interesting stock to watch in the coming weeks and into the summer.

TVIX, UVXY - another five percent lopped off

With the sp' closing @ 1563, the VIX slipped 7% lower, and this was naturally bad for both the leading 2x bullish VIX instruments of TVIX and UVXY, which declined by 5.5 and 5.1% respectively. Near term looks weak for the VIX, with a new up cycle starting next week.


TVIX, daily

UVXY, daily

Summary

First, keep in mind the latest action in the VIX

VIX'daily3

On any basis, the VIX looks like its going to slip lower into the extended 3 day Easter weekend. There is no reason why the bears will be able to whack this market significantly lower in the near term.

My best guess is that the indexes max out by next Tue/Wed, and by such time, the VIX might be in the 11s.

If that is the case, then TVIX and UVXY will be a further 5-10% lower.
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Another reverse split looms

I'm unaware of any planned reverse split for either TVIX or UVXY, but with the current prices so low, another 1 for 5 or even 1 for 10 RS seems likely within the next month or so.

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As with all leveraged instruments, such things have inherent..and 'terminal' decay, and are for short term holds ONLY ! Anyone holding these for more than 2-3 weeks at a time needs to have their trading screen taken away.