Three days ago, on May 14th, we published a Weekly Volume titled Why the Stock Market is Set for a Dramatic Swing. Today, on May 17th, we got that swing. US equities collapsed and the VIX, which was the focus of our entire report, had its biggest day in almost a year.
The report focused on the VIX (CBOE Volatility Index), also known as the ‘fear gauge’ of the market, which had recently fallen to a 23 year low. We warned that this lack of perceived risk could not last and today it came to an end as the VIX exploded 46.38% up 4.94 points to 15.59. Check out an excerpt from our exclusive report below:
“Today, we are focused on what can happen to the VIX, and, more importantly, the markets after a prolonged period of little to no perceived risk.
Market participants are pricing in the lowest volatility in 23 years! Should we believe it? Of course not.
If the aftermath following the previous three times the VIX was this low is any indication of what’s coming next, buckle up.”
Click here to Why the Stock Market is Set for a Dramatic Swing, which has quickly turned into one of our best calls of the year. If you are not receiving our free Weekly Volume, but would like to, click here.
The Dow Jones Industrial Average fell 370 points Wednesday as US equities put up their worst session in more than eight months. The VIX or CBOE Volatility Index had its biggest single day upward move since the U.K. voted to leave the EU last June.
iPath S&P 500 VIX Short Term Futures Jump 18% as US Stocks Fall
The iPath S&P 500 VIX Short Term Futures TM ETN (VXX) soared 18.38% to $16.10 per share on 170,967,095 shares traded. This trade got crowded in a hurry as investors looked to profit from falling stocks and rising anxiety towards US equities. The ETN has averaged between 30 million and 50 million shares traded over the past month, but traded a whopping 170 million on Wednesday.
At least one member in May’s Stock Challenge was betting the VIX would turn around as investors bailed on S&P 500 issuers. After being stuck in a downtrend for many months, the iPath S&P 500 VIX Short Term Futures ETN jumped 18% Wednesday.
iPath S&P 500 VIX Short Term Futures ETN – 1 Month Chart
According to the product summary for this ETN:
“The Index is designed to provide access to equity market volatility through CBOE Volatility Index® (the “VIX Index”) futures. The Index offers exposure to a daily rolling long position in the first and second month VIX futures contracts and reflects market participants’ views of the future direction of the VIX index at the time of expiration of the VIX futures contracts comprising the Index.”
Long-time member ‘Joey Walmsley‘ is leading all returns in May at the moment with 38.66%. If the markets continue to fall, members with bearish ETFs could quickly rise the ranks.