Daily ETF Roundup: UNG Surges As Weather Breaks, VXX Tanks Despite Market Woes

by on January 6, 2012 | ETFs Mentioned:

Stocks opened up the day with surprising losses given the positive jobs report that hit in the wee hours of the morning. The Dow surrendered 56 points while the S&P 500 lost 0.3%. Both oil and gold finished out relatively flat while the Nasdaq was one of the few winners among major benchmarks. One of the biggest surprises on the day came from the EUR/USD exchange rate which has now sunk to 1.272, levels not seen for quite some time. It seems that investors are losing confidence in the euro by the day and the brief period of relative silence from our neighbors across the pond seems to have spooked traders [see also 25 Ways To Invest In Natural Gas].

Today’s unemployment report was stellar by most accounts; overall unemployment dipped to 8.5% with 200,000 jobs added in December. Though the hefty gains in hiring was not met with strong markets, it still proves that the economy has been making positive steps over the past few months, as this is not the first pleasant data release to hit the markets. The thought of a stellar recovery has investors chomping at the bit, as “the more convincing the economic growth becomes, the less stimulus would be needed” from the Fed, writes Jeff Macke. In an effort to keep readers educated on today’s current market environment, we outline two of the most notable ETF performances on the day [see also Three ETFs Crushed By BAC’s 2011 Freefall].

One of the biggest ETF winners on the day came from the United States Natural Gas Fund LP (UNG). This fund, which has been under an enormous pressure as of late, was able to tack on 3.4% during Friday’s trading. The ETF has been stuck in a downward spiral for years now, posting a trailing 3 year loss of 87%, with high volatility in between. But today saw the fund make a nice turn around as the weather has finally started to break. With temperatures cooling off around the country, the demand for this commodity has begun to jump and has given this battered product a bit of relief for the time being [see also Why It’s Time To Buy Natural Gas].

One of the biggest ETF losers on the day from the S&P 500 VIX Short-Term Futures ETN (VXX), which lost about 1.5% in trading. Today’s markets, while slightly down, remained relatively flat for the day, leaving little volatility. This put downward pressure on VXX as the fund tends to perform poorly in horizontal markets. VXX has already lost over 10% in 2012 and may finally be correcting itself after going on a tear to end last year. Be warned, however, that earnings season kicks off next week and many analysts are predicting less-than-optimistic reports due to European woes. If that is the case, VXX could be in for a few strong trading days over the next few weeks [see also Inverse VIX ETN (XIV) Gets Hot Again].

Disclosure: No positions at time of writing.