The Standard and Poors 500 index (SPX) closed today at 5,554, up 11 points or 0.2%. SPX opened the week at 5,352, setting up a weekly gain of 3.8%. Trading volume remained below the 50-day moving average (dma) all week.

VIX, the volatility index for the S&P 500 options, opened on Monday at 20.8%, and steadily declined to today’s close at 14.8%. That level for VIX remains a couple of points higher than before the correction.

I track the Russell 2000 index with the IWM ETF, which closed today at 213, up 0.6 points or +0.3%. IWM gained 2.9% this week.

The NASDAQ Composite index closed today at 17,632, up 37 points or 0.2%. NASDAQ opened the week at 16,794, setting up a strong weekly gain of 5.0%. In spite of a strong week, NASDAQ’s trading volume remained below the 50 dma all week.

The Tale of Two Cities starts out with the famous line, “It was the best of times, it was the worst of times”. In the markets, last week was the worst of times and this week has been the best of times. What a contrast.

One could suggest the market had a temper tantrum over its disappointment with the FOMC not lowering the discount rate at the last meeting and got over it this week. It makes me wonder what will happen on September 18 if the FOMC decides to wait to lower rates. At least one of the committee’s members has already voiced his opinion that it would be prudent to wait for more data to confirm a decline in the rate of inflation before lowering rates. It is interesting that the Stock Trader’s Almanac cites September as historically the weakest month of the year for the stock market. That could make for an ugly coincidence of two trends.

Investors Business Daily’s Follow Through Day methodology has been very helpful for determining when it is safe to begin reinvesting in the market after a correction. But IBD appears to be breaking their own rules for this correction. IBD declared 8/15 as the Follow Through Day, even though the trading volumes on both SPX and NASDAQ were below average. Corrections often retest the initial lows. I wonder if IBD has jumped too soon. 



Our GS vertical spread was typical of my attitude in this market. I was only in the spread for two days. When it gave me a 21% gain, I took my profits and ran for cover.

I remain very cautious.