Equity ETFs Drop As Spain Rescue Disappoints And Greece’s Election Looms Large; VIXY Pops, GAZ Crashes

Ulli Market Review 1 Comment

[Chart courtesy of MarketWatch.com]

US stocks swung wildly Monday giving up early gains to close sharply lower following the best week of the year as investors remained concerned over the upcoming Greek elections and optimism over Spain’s $125 billion bank bailout-deal fizzled on worries that the benefits will not be sustained.

The treasury 30-year bonds pushed higher for the first-time in six days after Spanish yields surged to 6.5 percent over fears that the Iberian nation would be soon locked out of the capital markets, forcing it to seek external help.

If you find these feeble attempts to rescue Spain (and others) confusing, just like Wall Street does, you might want to review this short video from ZeroHedge explaining the ins and outs of the debt circus being presented in Euroland. This should clear up any misconceptions you may have.

The Dow Jones Industrial Average (DJIA) slipped 1.1 percent lower despite rising 96 points in early trade. Within the blue-chip index, 26 of the 30 components dropped.

Led by the technology sector, the S&P 500 Index (SPX) lost 1.3 percent while Telecommunications gained the most among the 10 business group.

The tech-laden NASDAQ Composite Index (COMP) tumbled 1.7 percent to close at 2809.73.

Despite advancing stocks luring investors to riskier assets earlier, US debts advanced, erasing losses as investors remained worried (rightfully so) that the Spanish banking bailout will fail to halt a contagion.

The yield on the benchmark 10-year Treasury surged nine basis points, only to give up the gains later, closing five basis points lower over Friday’s close at 1.59 percent.

ETFs in the news:

As markets turned choppy in the later half of the day, the fear-tracking CBOE Volatility Index (VIX) surged. VIX added 2.33 points, or 10.98 percent on the day as Greece elections over the weekend weighed on investors’ mind. Sunday’s election may well decide Athens’ continuation in the single-currency zone.

The ProShares VIX Short-Term Futures ETF (VIXY) emerged as one of the top gainers for the day, jumping 8.27 percent over Friday’s close. The Citigroup C-Tracks ETN Citi

Volatility Index Total Return (CVOL) also made solid gains, adding 8.85 percent on the day.

Energy stocks witnessed serious reversal of fortunes today. Natural gas started the week lower with prices slumping to seven week lows as sudden surge in shale gas supply driving prices lower.

The Barclays iPath DJ-UBS Natural Gas Subindex Total Return ETN (GAZ) was among the biggest losers, shedding 6.86 percent for the day. GAZ is currently trading close to its 52-week lows and may witness a nice uptick if the EZ crisis is resolved soon and demand picks up subsequently.

Other Natural Gas related products such as the United States Natural Gas Fund (UNG) also dived, losing 4.1 percent for the day, while trading volume was nearly 20 percent higher than the daily average.

Our Trend Tracking Indexes (TTIs) followed general market direction with the Domestic TTI remaining on the plus side by +1.55%, while the International TTI slipped a bit to -4.81%.

Disclosure: No holdings

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Comments 1

  1. Great video, done by ZeroHedge to explain the repeat of shenanigans by the banks in Euroland. When will we ever learn. Oh, when will we ever learn.

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