Tuesday was a good day for stock market investors, as several major-market benchmarks reached new all-time highs. With investors deciding to commit to the five-year-old bull market to start off the second half of 2014, advancing stocks greatly outnumbers decliners, and the number of stocks setting new yearly highs numbered in the hundreds. Yet even amid the strength in the market today, SodaStream (SODA), Portugal Telecom (NYSE: PT) and VelocityShares Daily 2x VIX ST ETN (TVIX) declined to their lowest levels in a year or more today.
Source: SodaStream.
SodaStream fell another 1.5% today, bringing its total loss for 2014 to around 30%. Throughout the past year, SodaStream has had plenty of promise with its at-home carbonation systems, but missteps in its marketing efforts during a tough promotional environment in the most recent holiday season took their toll. In addition, competitive efforts from elsewhere in the space have investors wondering if SodaStream can emerge victorious, especially as well-established beverage giants take sides with SodaStream's rivals. If the company can manage to correct those mistakes and take advantage of still-strong demand for its machines, then the stock could bounce back, but SodaStream will have to move quickly to hang onto its leadership role in the cold-drink space.
Portugal Telecom dropped by almost 6% as the telecommunications company had two of its directors leave the board. Portugal Telecom is still working with Brazilian phone-company Oi to merge, with the intent of creating a company that will span across the Atlantic and allow Portugal Telecom to compete against rivals in Spain and Mexico for the lucrative Latin American market. With the European economy still struggling, emerging markets represent an important growth opportunity for Portugal Telecom, and investors hope that the shared language with Brazilian customers could help boost the merged company's prospects. But some now fear that the directors' departure could indicate problems with the merger, and that could prove problematic for investors.
For the VelocityShares ETN, today's 5% drop merely marks the latest sign of investor complacency in the market. As stocks have risen, the S&P Volatility Index, also known as the Fear Index, has sunk to multiyear lows as investors get used to the lack of substantial downward moves. In this case, the VelocityShares ETN is leveraged, making its losses even more dramatic. Until the next market correction starts making investors fearful about their gains again, the VelocityShares ETN will have a tough time making much progress from its current low levels.
