The Standard and Poors 500 index (SPX) closed today at 4516, up 8 points on the day or +0.2%. SPX opened the week at 4426 for a weekly gain of 2%. All in all, it was a positive week, but trading volume dropped back below the 50-day moving average.

VIX, the volatility index for the S&P 500 options, continued its track lower all week, opening at 16.2% and closing today at 13.1%. It was unusual to see VIX track lower yesterday as the market fell, but apparently the large institutions were confident in this market. I can’t say I agree.

I track the Russell 2000 index with the IWM ETF, which closed up a little over two points at 191 and posted a 3.8% gain on the week. IWM solidly broke through its 50 dma today, although it did pull back a bit late in the day.

The NASDAQ Composite index closed today at 14,032, down 3 points or essentially unchanged on the day. NASDAQ opened the week at 13,695, resulting in a strong weekly gain of +2.5%. NASDAQ solidly broke out above its 50 dma this week and is approaching its July high around 14,400. NASDAQ’s trading volume remains below its 50 dma.

The trader’s most basic tactic is determining the trend of a stock or an index and then playing his prediction. But this market has been entirely too volatile for that approach. We had some nice gains in July, only to give it all back as we entered August, and now the market appears to be trying for a comeback run.

Perhaps this volatility will be the order of business until the FOMC meeting and announcement later this month. I remain very tentative and unwilling to devote much capital to this market. I recommend a cautious stance.