Published Tue, 28 Jul 2020 16:37:01 -0400 on Seeking Alpha
Seeking AlphaETF AnalysisVIXY: Roll Yield Continues To Hamper Returns Of This ETFJul. 28, 2020 4:37 PM ET|| About: ProShares VIX Short-Term Futures ETF (VIXY)by: QuandaryFXQuandaryFX Short-term horizon, currencies, commodities, long/short equitySummaryThe S&P 500 is likely headed higher due to trend analysis as well as fundamental support.
Despite the slight statistical tendencies suggesting higher levels in the VIX, overall returns to VIXY are likely to be negative through time.
Futures convergence continues to take value from VIXY shareholders and it will likely continue going forward.
As you can see in the following chart, the ProShares VIX Short-Term Futures ETF (VIXY) has continued to decline, with the past few weeks erasing much of the gains seen in June.
It is my view that VIXY is headed much lower and that if you haven’t sold yet, now is the time. Specifically, I believe that in the coming months we will see VIXY continue dropping and erase most, if not all, of the gain seen for the year.
Let’s start this piece off with an examination of the technical landscape of the S&P 500.
As you can see in the above chart, the market is undoubtedly in an uptrend, as observed from the daily time frame. We have continued to see the market hit new highs and several attempts to call the top have resulted in frustration and more upside.
Over the past week, the market pushed into new monthly highs by overcoming the resistance level established in early June. After this move into new territory, however, we witnessed a selloff which turned momentum to the downside as seen by the MACD indicator. This indicator basically measures differences between moving averages, so it gives a fairly reliable indication of the current stage of momentum in the market.
Technically speaking, I am warily bullish the market. In other words, I believe that the trend is certainly up as clearly evidenced by the continued ability of... Read more