History! XIV etn up 7 months in a row!
The Credit Suisse Velocityshares Inverse VIX short term ETN (XIV) has made history! It's up 7 months in a row for the first time ever! Can this streak continue? Sure, but lets take a look at some data points that make my antennas go up.
1. As of the 5/26 close, the 5 year returns for (XIV) stood at +877.17%.... (See chart below)
Can these kinds of returns continue for a little while longer? Sure they can, but at some point when everyone gets on one side of the trade, there's usually a vicious counter trend move.
2. (XIV) is up more than +140% since the Presidential election (11/4/2016).... (See chart below)
A $100,000 investment in XIV on 11/4/2016 is worth more than $242,000 today! Can these kinds of short term returns continue? Nobody really knows, but those kinds of moves seem a bit excessive to me....
3. The VIX itself is on a very interesting streak! It hasn't traded above 20 for 139 consecutive trading sessions... (See chart below)
This is the 2nd longest streak below 20 since 2012! The only one that lasted longer was a span in 2014, where it spent 171 trading sessions below 20. Although these streaks can last for longer than anyone thinks, the spike on the other side of this could be massive!
So what does all this mean? It just simply means that we're in a very tranquil market right now. Not many traders/investors are buying protection, and it seems the hot trade right now is being short volatility. This can continue for longer than anyone thinks, but once volatility does return, it will catch many off guard!
Thank you for reading!
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