Is This It? Check Complacency to Find Out

Is this it? That's the question I have been asking myself all morning. Is the market finally going to turn?

Front-month VIX futures have risen 30% today, but, interestingly, the following month's futures have not risen as much. As the term structure of the VIX has flattened (and even gone into backwardation from the August-September perspective) I have been buying volatility-linked ETNs (iPath S&P 500 VIX ST Futures ETN (VXX) and VelocityShares Daily 2x VIX Short-Term ETN (TVIX) ) today. These vehicles are structurally hampered by the need to keep reinvesting funds in future-month contracts, a value-destroying strategy in an upward-sloped VIX curve. That may be turning. Also, if we have a really big blowout in the next couple days, those volatility-linked ETNs will perform well as short-term trades and hedge against market declines, regardless of their medium-term characteristics....540 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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