By Chris McKhann
The Volatility Index is up almost 8% to 27.60. It's off the highs of the morning near 29, which was the highest level since early July when the S&P 500 climbed off support at 1020. This is the move - at least part of it - that the VIX futures have been predicting. It also closes some of the premium gap between the spot VIX and the front VIX futures.
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September futures rose 4.1% to 30.2, while October and November futures both trade at 33.10, up 3%. This means that the Short Term VIX Futures ETN (NYSEARCA:VXX) is up just 3.41% to $23.31 as it is made up of those two front-month contracts which carry those premiums.
Futures still predict further increases in VIX, which would correspond to further declines in the SPX. But it is actually a good sign that the VIX remains below the futures and may be an indication that we are ready for a bounce. While the interest is high, now is not the time to go out buying hedges, at least not the very expensive traditional ones.
Disclosure: No positions