VIX Split
Several times over the past five years, we've taken a look at times when fund sponsors split the shares of their leveraged and/or inverse ETFs. When it occurs in clusters, or happens to some of the largest funds, it has been an excellent contrary indicator.
So it was interesting that ProShares has now announced a split of the most popular fund that bets against the VIX, SVXY. The fund has enjoyed a relentless uptrend as stocks have risen and volatility has collapsed. So they're splitting the shares 2-to-1 in order to make the share price more palatable for retail traders.
The fund has been split twice before, on September 20, 2012, and January 10, 2014. Both times, it coincided with an almost imminent peak in SVXY, meaning there was a floor under the VIX and a ceiling on the S&P 500.
In 2012, the VIX rose more than 60% and the SPX dropped more than 7% over the next 40 days.
In 2014, the VIX rose more than 75% and the SPX fell more than 5% over the next 30 days.
This is another warning that the low volatility has created a situation that has been untenable in the recent past.