Daily ETF Roundup: VXX Sinks, EWJ Rises

by on July 6, 2010 | ETFs Mentioned:

Domestic equity markets surged to start the holiday shortened week, as major indexes were all up more than 1% in early morning trading. However, stocks quickly lost much of their gains and tumbled back towards breakeven to barely finish in positive territory for the day. Oil finished the day flat, while gold continued its slide to finish the day below the $1,200/oz. mark after the precious metal lost 1% in Tuesday trading. “There are pockets of opportunity out there. There are some areas with good valuations,” said Aaron Reynolds, senior portfolio analyst at Robert W. Baird in Milwaukee, who also warned that uncertainty about the direction of the economy would lead to choppy trading.

The ETFdb 60 Index, a benchmark measuring the performance of asset classes available through ETFs, inched up 1.98 points, or 0.2%. Winners outnumbered losers by nearly three-to-one in heavy trading as traders returned from a long weekend.

Despite the choppiness of the trading, one of the biggest losers on the day was iPath S&P 500 VIX Short-Term Futures ETN (VXX), which fell by 4.3%. This sharp loss came after equity markets surged to start the day and finished in positive territory despite negative economic data. VXX also experienced higher than average volume, with more than 24.4 million shares trading hands, a big increase from its average volume of 18.8 million shares. Today’s sharp loss looks to put an end to VXX’s run-up as of late; the fund had surged by close to 20% over the past two weeks and 35% over the past three months [see fundamentals of VXX here].

One of the biggest winners on the day was the iShares MSCI Japan Index Fund (EWJ), which jumped higher by 2.2% in Tuesday trading. This spike came after it was reported that China bought more than half a trillion yen in Japanese government bonds, an event which helped to temporarily boost the Nikkei index. Another positive development came when Japan’s economic minister, Satoshi Arai, said that in spite of the weak Japanese market and the rising yen, the economy is continuing to recover. EWJ is down about 3% year-to-date [see holdings of EWJ here].

Disclosure: No positions at time of writing.