The Dow is rallying more than 100 points Tuesday as the Federal Reserve meets and investors anticipate a press conference with Fed Chairman Ben Bernanke.

Technical traders are encouraged by so-called inverse head and shoulder patters in major stock indexes like the S&P 500, while Wall Street’s “fear gauge” continues to fall.

The iPath Long Enhanced S&P 500 VIX Mid-Term Futures ETN (NYSEArca: VZZ) was among the steepest decliners Tuesday with a nearly 5% loss.

Exchange traded products that track CBOE Volatility Index (VIX) futures tend to rise when markets are under pressure. They can also be used to hedge.

The largest in the category by assets — iPath S&P VIX Short-Term Futures ETN (NYSEArca: VXX) with nearly $1.4 billion — was down 35.4% year to date through April 25, according to Morningstar.

Because they track VIX futures contracts, exchange traded funds (ETFs) can see their performance differ from the spot price for VIX. For example, they can underperform when futures are said to be in contango.

  • ProShares VIX Short-Term Futures (NYSEArca: VIXY)
  • ProShares VIX Mid-Term Futures (NYSEArca: VIXM)
  • iPath S&P 500 VIX Short-Term Futures ETN (NYSEArca: VXX)
  • iPath S&P 500 VIX Mid-Term Futures ETN (NYSEArca: VXZ)
  • VelocityShares Daily Inverse VIX Short-Term ETN (NYSEArca: XIV)
  • VelocityShares Daily Inverse VIX Medium-Term ETN (NYSEArca: ZIV)
  • UBS E-TRACS Daily Long-Short VIX ETN (NYSEArca: XVIX)
  • VelocityShares offers an ETN lineup that includes Daily 2X VIX Short-Term ETN (NYSEArca: TVIX)
  • Daily 2X VIX Medium-Term ETN (NYSEArca: TVIZ)

ProShares VIX Short-Term Futures

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.