VIX ETFs Still Flopping as Small-Caps Hit Fresh High

January 15th at 2:30pm by John Spence

The iShares Russell 2000 (NYSEArca: IWM) rose to a new all-time high on Tuesday before pulling back somewhat in afternoon trading.

The U.S. small-cap index logged another record price level with the CBOE Volatility Index lingering near lows last seen in 2007. [Small-Cap ETF Nearly Doubles S&P 500 Gain]

“Complacency is at its highest level since mid-2007, another compelling reason for caution. The CBOE Volatility Index (VIX) is notably low as it trades at the bottom of a four year range; a sharp bounce back is inevitable, a move which would accompany a violent equity sell-off,” said Tarquin Coe, technical analyst at Investors Intelligence, in a note this week.

“Furthermore, news last week that net inflows to equity funds were at $22.2 billion in the week to January 9th, the highest level since September 2007; providing another strong contrarian sign that the rally is near its end,” he wrote. [Investors Bullish on Stock ETFs]

The iPath S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX) fell to a fresh all-time low on Tuesday. [VIX Drops to 2007 Levels]

CBOE Volatility Index

vix-etfs

Full disclosure: Tom Lydon’s clients own IWM.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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