Posted on Tuesday, March 13th, 2012 | In Current Market News, Exchange Traded Funds
The financial sector led the way higher today on banks announcements of dividends and optimism over the Federal Reserve stress tests. VIX crumbled to 14.80, a decline of 5.4% that takes the index all the way back to 2007, indicating extreme complacency in the stock market.
VelocityShares Daily Inverse VIX Short Term ETN (NYSEARCA:XIV) +4.4%, the ETN tracks the one day movement of VIX and moves inversely to the underlying index.
ProShares Short MSCI Emerging Market ETF (NYSEARCA:EUM) -2.8% as emerging markets rallied on global financial strength.
Vanguard Extended Duration ETF (NYSEARCA:EDV) -2.5% as the long Treasury bond sector was pounded by good economic news and money flowing into stocks.
iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:XIV) -4.7% as volatility collapsed to levels not seen since the onset of the financial crisis.
Financial Select Sector SPDR ETF (NYSEARCA:XLF) +3.7% as banks rocked and the financial sector was the top performing sector of the day.
SPDR KBW Bank ETF (NYSEARCA:KBE) +3.97, the ETF T tracks the S&P Banks Select Industry Index which consists of banks, national money centers and regional banks.
Bottom line: Today’s powerful rally was spurred by a positive retail sales report and reassuring words from the Federal Reserve that they were maintaining their accomodative monetary policy until late 2014. Markets like cheap money and banks soared while volatility collapsed to levels not seen since 2007. Complacency reigns supreme so the next days and weeks will tell if the herd is right or not.
Disclaimer: Wall Street Sector Selector actively trades a wide range of exchange traded funds (ETFs) and positions can change at any time.
About John Nyaradi (http://www.wallstreetsectorselector.com)
John Nyaradi is Publisher of Wall Street Sector Selector: Your Home For ETF Investing! John writes a weekly guest column, John Nyaradi’s ETF Edge for MarketWatch.com and his investment articles have appeared in many online publications including Trading Markets, Money Show, Yahoo Finance, Investors Insight, Fidelity, ETF Daily News, iStock Analyst , among many others. His book, Super Sectors: How to Outsmart the Market Using Sector Rotation and ETFs, is published by John Wiley and Sons and included among the Years Top Investment Books in the 2011 Stock Trader’s Almanac.