Volatility in the markets has been on a downward trend, impacting the VS TR 2x Long VIX Futures ETF (UVIX). The five-day realized volatility on the S&P 500 has significantly decreased from 22.2 to 8.7, indicating a less jittery market environment. This reduction in volatility has led to a repositioning among investors, with increased interest in Big Tech, AI, and semiconductor sectors, as well as small-caps and gold. The shift in market sentiment is driven by volatility-controlled funds, which tend to buy more stocks when market volatility decreases. However, there is a cautionary note that this enthusiasm could become unstable, potentially hindering further market gains.
The UVIX ETF, which is designed to provide leveraged exposure to VIX futures, has seen its price decline to $27.70, down 3.53% as of 10:00 AM on January 23.