- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1293
The Standard and Poors 500 index (SPX) closed today at 4123, down 24 points or 0.6%. The initial response to the FOMC announcement on Wednesday was positive, but that wore off quickly with SPX trading off significantly the last two days. Trading volume was modestly above the 50-day moving average (dma) this week.
VIX, the volatility index for the S&P 500 options, opened Monday at 30%, traded as low as 25% on Wednesday before spiking higher and closing today at 30%. This level of volatility is not modest, even if we are becoming accustomed to it. Remain vigilant.
The NASDAQ Composite index closed at 12,145 today, down 173 points or
1.4%, and down 1.5% for the week. Trading volume ran below the 50 dma all week. Monday’s intraday low is a 23% correction since the January highs for NASDAQ.
Last Friday’s low was the low for that week, and today’s close was this week’s low. The only good news is the appearance of the broad market finding a support level this week. Of course, I may be proven wrong next week. NASDAQ closed today just below the lows set on Monday and Thursday. SPX’s low on February 24th was around 4115 and trading this week appeared to be trading right along that line.
We have suffered through a lot of bad news: record levels of inflation, FOMC moving to raise interest rates and shrink the money supply and, to top it all off, a negative GDP growth number for the first quarter.
I remain largely in cash, although I did venture out with a couple of trades late in today’s trading session. Those trades were a result of my observations that the market appeared to be finding support this week.
The trades I entered today are just my “toe in the water”. My posture remains very cautious, largely in cash with close stops on the few positions in play.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1337
The Standard and Poors 500 index (SPX) closed today at 4132, down 156 points or 3.6%. SPX closed the week down 2.9%. If I put on my rose-colored glasses, I would point to Monday and Thursday’s moderately bullish trading sessions. The pessimist (or realist) might note that the market closed at or very near the lows for the day both on Tuesday and today. Why is that significant? When the market trades down strongly, buyers often come into the market to buy what they consider bargains. When that doesn’t happen, it is a dire warning. Adding to the negativity was increasing trading volume. SPX’s trading volume was above the 50-day moving average (dma) every day this week. Increased volume reinforces the observed trend, in this case, a bearish trend.
VIX, the volatility index for the S&P 500 options, opened Monday at 30% and closed today at 34%. These levels of volatility aren’t quite back to those of early March, but they are close. I track the Russell 2000 index with the IWM ETF. IWM closed today at 184.95, down 2.9%. IWM opened the week at 190.99, resulting in a loss of 3.2% for the week. IWM is trading at levels not seen since December 2020. IWM is down 22% this year.
The NASDAQ Composite index closed at 12,335 today, down 537 points or
4.2%, and down 3.2% for the week. Trading volume ran below the 50 dma all week. Today’s close represents a 22% correction since the January highs for NASDAQ.
My rose-colored glasses are ruined. I was stomping on them today. It is difficult or impossible to put a positive spin on this market. The S&P companies have now hit corrections of 14% three times this year. NASDAQ and the Russell 2000 are now down 22%. Unfortunately, I don’t see any light in this tunnel. Inflation is setting records. The Fed is reducing the money supply and raising interest rates to fight inflation. Powell appears to be hinting at a half percent rate increase at the meeting next week. We just set our first negative GDP number for the first quarter. Economists label the economy as in a depression after two successive negative GDP declines.
I am largely in cash now, and plan to stay there or may even close more trades. I may be 100% in cash by the Fed meeting. The only exceptions are my index condor trades. They are doing well. My Flying With The Condor™ service is up 16% through April and the May and June positions both remain in the black. But even those positions may be adjusted next week.
I am going to have to see some solid market growth before venturing out with any new trades.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 2328
The Standard and Poors 500 index (SPX) closed yesterday at 4546, up 15 points or 0.3%. SPX closed the week nearly unchanged with a 0.1% gain. The good news was a recovery from yesterday’s intraday lows at 4508. Resistance from early February has proven formidable. Trading volume was well below the
50-day moving average (dma) all week.
VIX, the volatility index for the S&P 500 options, opened Monday at 22.1% and closed yesterday at 19.6%. VIX is now approximately at the levels of early February before the market declined for the second correction.
The NASDAQ Composite index closed at 14,262 yesterday, up 41 points or +0.3%, and up +0.6% for the week. Trading volume was modest, running around the 50 dma most of the week.
Last week’s market began to show the resistance set by the highs in early February and the bounce off of that resistance was even more clear this week. My trading stance is unchanged. I opened some new trades this week for my trading group, but I closed several trades in my Conservative Income service to avoid the weekend risk. I am proceeding cautiously.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1426
The Standard and Poors 500 index (SPX) closed today at 4488, down 12 points or 0.3%. SPX closed the week down 1.3%. The only good news that trading appears to have stabilized over the past three trading sessions. Resistance from early February has proven formidable. Trading volume ran below the 50-day moving average (dma) again this week – no conviction.
VIX, the volatility index for the S&P 500 options, opened Monday at 20.8% and closed today at 21.2%. Declining VIX over the past two days underscores the sideways nature of recent trading. The large players aren’t concerned about a large decline.
I track the Russell 2000 index with the IWM ETF. IWM closed today at 197.87, down 0.3%. IWM opened the week at 207.87, resulting in a loss of 2.4% for the week. IWM is again below both its 50 dma and its 200 dma.
The NASDAQ Composite index closed at 13,711 today, down 186 points or
-1.3%, and down a whopping 4.1% for the week. Trading volume ran below the 50 dma almost the entire week.
Last week’s market began to show the resistance set by the highs in early February but Wednesday’s gap down on the broad market indices was a large step lower.
The one redeeming factor for this week’s market is the trading of the S&P 500 right along that 200 dma. At least the bleeding has stopped – for now. NASDAQ and the Russell 2000 are leading the market lower. Defensive stock sectors such as utilities and healthcare are gaining and technology and transportation stocks are being sold. Increasing fuel costs are certainly a factor in transportation but these stocks are also sensitive to declining economic growth. Rising interest rates will be a headwind for economy and, in turn, the stock market.
My trading stance is unchanged. I am cautious about entering new trades; I take profits whenever I can rather than hold and hope for larger gains; I close the losers quickly. So far it doesn’t appear the markets are declining farther, but I remain cautious.
- Details
- Written by Dr. Duke
- Category: Dr. Duke's Blog
- Hits: 1323
The Standard and Poors 500 index (SPX) closed today at 4543, up 23 points or 0.5%. SPX closed the week with a 1.8% gain. After last week’s very strong gains, a bit of sideways choppiness was to be expected. Trading volume was not only below average all week but steadily declined each day this week. It may be difficult for SPX to break through resistance at the highs of early February.
VIX, the volatility index for the S&P 500 options, declined steadily this week, opening Monday at 25.1% and closing today at 20.8%. That decline is seductive but recall that VIX is now where it was in early February before the market took another run to establish a lower correction.
I track the Russell 2000 index with the IWM ETF. IWM closed today at 206.12, up less than a half a point, or 0.1%. IWM recovered its 50 dma last week but stalled and traded sideways this week. The Russell 2000 is not leading this bull market.
Similar to the Russell 2000, the NASDAQ Composite index recovered its 50 dma last week, but NASDAQ continued its gains, closing at 14169 today for a 2.2% increase this week. Trading volume was modest, running around the 50 dma.
Last week’s market was strong with SPX, NASDAQ and the Russell 2000 all recovering their 50-day moving averages. But the market proceeded more cautiously this week, making only modest gains. It appears that the resistance set by the highs in early February may be starting to slow this market. I would feel more positive if the Russell 2000 began to lead this market higher, but we may have too many headwinds for that degree of bullish strength.
Proceed cautiously.
