Daily ETF Roundup: VXX Jumps On Shaky Trading, QQQ Slides On AAPL Sell-Off

by on April 19, 2012 | ETFs Mentioned:

Today was a very frustrating session, as stocks swung violently back and forth before finally selling off to close out the day. The Dow surrendered 68 points while the S&P 500 dipped by approximately 0.6%. Today’s confusing trading came as some big banks had strong earnings while housing data was simultaneously weak; eventually the bears took over and markets posted their second straight loss. “‘What we have going forward…is more of an economic-and earnings driven market, which unfortunately won’t be quite as much fun and it won’t be as smooth either’” says Russ Koesterich, Global Chief Investment Strategist at iShares. Koesterich was quick to note that he does not necessarily believe that 2012′s rally has come to an end, but that the coming months will certainly be more volatile than the former.

The commodity side of the market watched both crude oil and gold finish relatively flat. It used to be that a sell-off meant good news for gold, and gold traders, but is appears that the precious metal may be losing its appeal as a speculative instrument and even a safe haven. Grain-based commodities had a very strong day overall, though the leader of futures contracts came from corn, which jumped by over 3%. Not surprisingly, natural gas futures dipped 2.4% on another unexpected jump in supply. For now, we outline two of the most significant ETF movers on the day to keep investors up with these choppy markets [see also The Best (and Worst) Performing Commodities From Q1].

One of the biggest ETF winners on the day came from the S&P 500 VIX Short-Term Futures ETN (VXX), which tacked on 0.7% during the session. VXX had trouble getting going today, but once the mid-day sell-off began, it was able to climb out of its hole and post a positive session, a rarity for this fund. VXX, which is home to over $1.5 billion in assets, traded 50 million shares on the day. Despite making gains, this ETN is still down over 47% on the year, as the first quarter bull market wreaked havoc on its share price [see also Time To Buy VIX ETNs?].

One of the biggest losers on the day is also one of the most popular ETFs in the world, the QQQ Fund (QQQ). QQQ’s losses of more than 1.1% were largely due to its 17% allocation to Apple (AAPL) which endured a rough sell-off on the day. It simply goes to show you that a lack of portfolio diversity can drag down an ETF no matter how strong its investment thesis may be. It is important to note, however, that Microsoft (MSFT), QQQ’s second biggest holding, jumped roughly 3% in after hours trading based on their earnings, so QQQ may recover some of its losses upon opening tomorrow [see also ETFs To Bet Against Apple].

Disclosure: No positions at time of writing.