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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.
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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.
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The Standard and Poors 500 index (SPX) closed today at 4463, up 51 points or 1.2%. SPX opened the week at 4203 and ended the week with an impressive 6.2% increase. Trading began to strengthen on Tuesday and took off the rest of the week. Trading volume was below average most of the week but spiked strongly higher today. Usually, I would interpret that volume spike as an endorsement of the market’s move higher, but today is quadruple witching which always causes a large volume spike as four major derivatives are settled each quarter.
VIX, the volatility index for the S&P 500 options, declined steadily this week, opening Monday at 31.0% and closing today at 22.9%. That is a large decline. Is the market recovery really here?
The NASDAQ Composite index also turned in a positive week of trading with an 8.6% gain, outperforming all of the broad market indices. NASDAQ closed today at 13893 with a gain of 279 points. Of course, NASDAQ took significant losses in this correction, so one would expect it to run faster when the skies cleared. NASDAQ trading volume ran above the 50 dma all week and spiked higher on quadruple witching today.
Jerome Powell and the FOMC said all of the right things this week and really encouraged the market. It isn’t common to see four days of advances like we saw this week. Now the question becomes whether we continue to see strong advances or perhaps we will see the classic stair step advance with occasional “breathers” starting next week.
I am beginning to put additional capital to work in this market, but I am proceeding cautiously.
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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.
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The Standard and Poors 500 index (SPX) closed yesterday at 4204, down 55 points or 1.3%. SPX opened the week at 4327 and ended the week down by 2.8%. Trading began very weakly on Monday and declined 3.6% by the close on Tuesday. Trading the balance of the week kept SPX largely on a sideways track. Trading volume of the S&P 500 companies spiked early in the week but declined the rest of the week, moving below the 50-day moving average (dma) Thursday and Friday.
VIX is the volatility index for the S&P 500 options, and it declined steadily this week, opening Monday at 35.9% and closing yesterday at 30.8%. Volatility remains elevated; don’t let your guard down.
The NASDAQ Composite index followed all of the broad market indices yesterday and closed down 2.2% at 12844. NASDAQ opened the week at 13328, so NASDAQ remains the weakest index this week with a decline of 3.6%. NASDAQ trading volume ran above the 50 dma all week.
The broad market indices traded largely down and then sideways this week. On 2/24, the S&P 500 index traded down to 4115 before recovering a bit to close at 4156. This is the latest area of support during this correction. Tuesday’s low this week at 4158 bounced off that support level and yesterday’s close was well above those levels.
Thus far, the news from Ukraine has not done any more damage to the stock market. I believe the bullish foundation that seems to support this market is largely due to the relaxing of the Covid restrictions and the expected strengthening of the economy. The primary hobgoblins worrying the market are record-setting levels of inflation coupled with the Fed’s expected increase of the discount rate next week. A quarter point rate increase is probably priced into this market, but a half point increase might push traders to sell.
The broad market indices are largely trading sideways as the FOMC meeting approaches, albeit a very choppy sideways movement.
I have had good results with small positions in oil and gold stocks, e.g., the GLD spread I sent to newsletter subscribers on 2/22. But I remain largely in cash and will wait on the FOMC announcement and the market’s reaction before changing that position.
