A Longer Term View Of The Total Collapse In Market Volatility (VXX)

Share This Article
August 23, 2017 5:59am NYSE:VXX

From Corey Rosenbloom: We know that volatility is lower in our current environment, but by how much… and what does it mean?

Is it going to change or stay this way forever?

Let’s take a quick look:

Volatility SP500 SPX

First, take a moment to view my prior update “Charting How Volatility has been Zapped from our Current Market” for a closer (shorter-term) view.

The perspective above uses the Weekly Chart going back to the birth of the current multi-year bull market.

What we’re seeing in the indicator beneath price is the percentage change per week in the S&P 500.

I drew a horizontal line at the +4% and -4% levels for reference and also drew a “triangle” or compressing trendline to pinpoint the ongoing compression in weekly range (volatility).

The last time we saw a week down more than 5% was right at January 2016 and then one more week like that exactly two years ago this same week in August 2015.

We’ve not seen a 5% up-week – despite the ongoing bull market – since January 2013 (and before that – December 2012).

Volatility was much higher at the end of the 2008 Bear Market and the beginning of the 2009 Birth of the Bull Market.

In a sense, low volatility is good (especially for longer-term investors) because it reduces portfolio fluctuations and is part of an ongoing stable bull market.

Intraday and swing traders prefer higher volatility environments – in bull or bear swings – and thus don’t tend to make as much money during extended low volatility environments.

Again, check the prior post for quick ways to adapt to low volatility environments.

We can’t change the market – we can only play the hands (and trades) the market deals us.

The iPath S&P 500 VIX Short Term Futures TM ETN (NYSE:VXX) was unchanged in premarket trading Wednesday. Year-to-date, VXX has declined -53.59%, versus a 10.82% rise in the benchmark S&P 500 index during the same period.

VXX currently has an ETF Daily News SMART Grade of F (Strong Sell), and is ranked #8 of 12 ETFs in the Volatility ETFs category.

This article is brought to you courtesy of AfraidToTrade.com.

Read Next

Get Free Updates

Join over 50,000 investors who get the latest news from ETFDailyNews.com!

Most Popular

From Our Partners

Explore More from ETFDailyNews.com

Free Daily Newsletter

Get daily ETF insights from our market experts. Never miss another important market development again!

ETFDailyNews.com respects your privacy.

Best ETFs

We've rated and ranked nearly 2,000 ETFs and ETNs using our proprietary SMART Grade system.

View Top Rated ETFs

Best Categories

We've ranked dozens of ETF categories based on relative performance.

Best ETF Categories