VIX ETFs finally hit the VIX Fiscal Cliff bottom: will the bounce last?

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[ExxonPatrolUs]

The VIX Index and VIX ETFs finally hit the VIX Fiscal Cliff bottom, but will the bounce last? Hard to say, as the iPath S&P 500 VIX Short Term Futures ETN (NYSEARCA:VXX) only rose .22%, while the VelocityShares Inverse VIX ETN (NYSEARCA:XIV) only lost .20%. The VIX Index rose 1.24% to close at 13.81, still very well below the average ’20′ level of fear.

Perhaps investors are finally starting to feel fear regarding this year’s first earnings season, however after a positive Alcoa (NYSE:AA) earnings report released last night, fear surrounding earnings reports is unlikely, even if the widely anticipated Wells Fargo (NYSE:WFC) report turns sour. Alcoa (NYSE:AA) Earnings Report Boosts Index ETFs.

More likely, the VIX has finally hit rock bottom and finally might correct, especially if things do get ugly tomorrow and Friday. Considering that the VIX Index dropped a record 39% in one week last week, the VIX Index and VIX ETFs were bound to hit bottom sometime, and it will likely take a while to spring back into fear. Of course, with the upcoming Congressional infighting surrounding the debt debate and sequestration battle, markets could well be ripe with fear. Moment Of Truth For U.S. Stocks and ETFs.

So, have the VIX and VIX ETFs hit rock bottom, and if so, will the bounce last? Only time will tell. VIX ETF Update:

Volatility Index – New Methodology (VIX): Index: 13.81, +1.40%

iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX): +.22%, This ETN is designed to track volatility in the markets as measured by the Chicago Board Options Exchange Market Volatility Index (CBOE Index), a popular measure of the implied volatility of S&P 500 index options. The CBOE Volatility Index is also known as the “fear” index or “fear” indicator in markets. The iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX) prices itself off of the average and implied volatility of the first two months of futures contracts of the S&P 500 Index.

VelocityShares Daily 2X VIX Short-Term ETN (NYSEARCA:TVIX): -.72%, This ETN is designed to track 2X return on volatility in the markets as measured by the S&P 500 VIX Short-Term Futures Index. The S&P 500 VIX Short-Term Futures Index measures the volatility of the S&P 500 Index via futures contracts as traded on the CBOE. The CBOE Volatility Index is also known as the “fear” index or “fear” indicator in markets.

iPath S&P 500 VIX Mid-Term Futures ETN (NYSEARCA:VXZ): -.95%, This ETN is designed to track volatility in the markets as measured by the CBOE Volatility Index futures contracts. The CBOE Volatility Index is also known as the “fear” index or “fear” indicator in markets. The iPath S&P 500 VIX Mid-Term Futures ETN (NYSEARCA:VXZ) is priced from the average volatility of the 4th through 7th month futures contracts of the S&P 500 Index as traded on the CBOE.

S&P 500 Dynamic VIX ETN (NYSEARCA:XVZ): -.54%, This ETN is designed to track volatility in the markets as measured by the S&P 500 Dynamic VIX Futures Total Return Index. The S&P 500 Dynamic VIX Futures Total Return Index seeks to combine results of volatility of the S&P 500VIX Short-Term Futures Index Excess Return and the S&P 500 VIX Mid-Term Futures Index Excess Return to create an accurate market volatility reading, as measured by the CBOE. The CBOE Volatility Index is also known as the “fear” index or “fear” indicator in markets.

Velocity Shares Daily Inverse VIX Short-Term ETN (NYSEARCA:XIV): -.20, This ETN is designed to inversely track the volatility in the markets as measured by the S&P 500 VIX Short-Term Futures Index. The S&P 500 VIX Short-Term Futures Index measures the volatility of the S&P 500 Index via futures contracts traded on the CBOE. The CBOE Volatility Index is also known as the “fear” index or “fear” indicator in markets.

Bottom Line: The VIX Index and VIX ETFs finally hit rock bottom today. How long the bounce lasts or if it lasts at all is an unknown, and we will likely have a better idea by the end of the week.

[Ghost of Philip Marlowe]

The vix is way over rated. If you track it for some time, you’ll find that it has practically no predictive value, that it does little more than inversely track what has already been indicated by the other indices. It is always lagging behind.