Equities more than erased weakness early last week, finishing Friday on a high note and “gap up” in the S&P 500, ultimately closing at 1344.90 and reaching its highest levels since last summer.

Our market technician David Chojnacki now points out that support exists from a technical standpoint in SPX both at 1313 and 1300. The Nasdaq 100-100 Index continued to display leadership, a theme we have spoken about for several months, and actually closed Friday at 2529.17, above what we saw as technical resistance (2500 and 2515 in the index provided resistance).

What seems like an insatiable appetite for equities in the early going here in 2012 can be seen in the VIX (CBOE Volatility Index) as well, as it closed Friday with a 17 handle, and it is mired in contango (where distant month futures are significantly more expensive than near month futures).

In fact, several months ago in early November we spoke about a pick up in activity in several VIX related ETNs including VelocityShares Daily Inverse VIX Short Term ETN (NYSEArca: XIV) and the product has rallied an astounding 76% from its early December 2011 lows as the the gradual trending melt down in the VIX itself coupled with contango has propelled this ETN higher in a relatively short amount of time.

On that note, trading volumes were huge on Friday and last week in general in VIX products, especially VelocityShares Daily 2X VIX Short Term ETN (NYSEArca: TVIX) and ProShares VIX Short Term Futures ETF (NYSEArca: VIXY). From the ETF/Index options side of the business, we continue to notice measured downside protective put buying in products such as iShares Russell 2000 (NYSEArca: IWM) and SPDR S&P 500 (NYSEArca: SPY), which is likely a reflection of some institutional “caution” regarding this 2012 rally, and also managers taking advantage of benign levels in the VIX and establishing portfolio protection at attractive levels.

From a fund flows standpoint, and at the risk of sounding like a broken record, we need to address huge inflows in Emerging Markets ETFs once more. Vanguard Emerging Markets (NYSEArca: VWO) took in an impressive $1 billion once more last week after several strong weeks throughout January of steady inflows as well. [Investors Flock to Emerging Market ETFs]

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