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Written by Dr. Duke

Category: Dr. Duke's Blog

Created: 07 August 2021

Last Updated: 07 August 2021

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The Standard and Poors index (SPX) made two new all-time highs this week, closing Friday at 4437, up 7 points on the day and up 0.7% for the week. The trading volume of the S&P companies ran above and below the 50-day moving average (dma) this week but fell below the 50 dma as the index made new 
all-time closing highs on Thursday and Friday.

VIX, the volatility index for the S&P 500 options, declined steadily this week, hitting an intraday high on Monday at 19.9% and closing Friday at 16.2%. This isn’t an “all clear” signal but it is a big improvement over the past couple of weeks.

I have plotted the prices of the IWM ETF below to track the Russell 2000 index. The owners of Russell have priced everyone out of Russell 2000 index and option data. That is why I plot the IWM prices. IWM magnified the moves of the large blue chips this week, declining the first three days and then spurting higher Thursday and Friday. However, IWM could not break above its 50 dma on Friday at 224.93 and pulled back to close at 223.38.

The NASDAQ Composite index traded steadily higher all week and set a new all-time high on Thursday at 14895. But it gave some of that back on Friday, closing down at 14836, down 0.4% on the day but remained up 0.5% for the week. NASDAQ’s trading volume continued run below its 50 dma all week.

This year has been frustrating for traders, spurting higher and then falling sharply, only to recover the previous highs in short order. This week continued the move higher. The bulls are banking on the economy recovering strongly from the economic lockdowns, and the data appear to be supporting that thesis. The pullbacks are the effects of the lingering doubts. This is unknown territory. We have never experienced a lockdown anything like this since World War II.

I started the week 74% in cash and ended the week at 75%. I had hip replacement surgery on Monday, so I didn’t look to increasing my positions this week. They tell me I am doing well, wandering around the house, and even walking around the block yesterday with the assistance of a cane.  I focused on trade management of open trades this week. We closed a nice one with Apple on Thursday with a 60% gain and closed profitable earnings trades on TSLA, MSFT and GOOGL.

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Written by Dr. Duke

Category: Dr. Duke's Blog

Created: 23 July 2021

Last Updated: 23 July 2021

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The Standard and Poors index (SPX) posted a very bearish day last Friday and followed with even more losses on Monday. Similar to the past several pullbacks this year, SPX bounced off its 50-day moving average (dma) on Monday and began its dramatic recovery, closing today at 4411, up 1% on the day and 2.7% for the week. Monday morning’s gap opening lower after a large downturn on Friday was very disheartening. I closed several positions and hedged others. The S&P 500 index motored higher the rest of the week, as though nothing had happened. The trading volume of the S&P companies declined all week from its high on Monday.

VIX, the volatility index for the S&P 500 options, spiked upward to 25% on Monday but declined all week to close today’s market at 17%. Don’t become complacent. First of all, 17% isn’t very low, and secondly, VIX dipped to 16% today but could not hold it. Traders remain on guard and are buying protection.

I have plotted the prices of the IWM ETF below to track the Russell 2000 index. The owners of Russell have priced everyone out of Russell 2000 index and option data. That is why I plot the IWM prices. A single glance at the chart below stands in dramatic contrast to the large cap stocks that dominate the S&P 500 and the NASDAQ Composite. IWM recovered some of the earlier losses today, closing at 219.50, up 0.4% on the day and up 4.2% for the week. SPX and NASDAQ are both well above their 50 dma, but IWM remains 2.4% below its 50 dma. The caution flags are out.

The NASDAQ Composite index mirrored the recovery of the S&P 500, closing today at 14,837, up 152 points on the day or +1% and up +4.2% for the week. NASDAQ’s trading volume continued its below average track record and decreased significantly today.

As I observed last week, this year’s market has been a series of fits and starts with traders being whipsawed in and out of the markets. After Monday’s large gap opening lower, many traders were spooked, and I was among them. The S&P 500 index has consistently pulled back this year only to find support at its 50 dma. That happened again on Monday and the rest of the week was a dramatic run higher with four gap openings higher. You don’t see that very often.


The crucial question remains. When will buying the dip be a costly mistake? It has worked seven out of seven times this year…

I started the week 58% in cash and ended the week at 54%. I opened some new trades this week, but I remain cautious. This market remains nervous and twitchy. Be careful to maintain a moderate risk exposure.

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Written by Dr. Duke

Category: Dr. Duke's Blog

Created: 31 July 2021

Last Updated: 31 July 2021

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The Standard and Poors index (SPX) essentially traded sideways this week, closing Friday at 4395, down 24 points on the day and down 0.3% for the week. The trading volume of the S&P companies ran at or below the 50 day moving average (dma) all week with the exception of Friday when it came in at 2.27 billion shares with the 50 dma at 2.06 billion shares.

VIX, the volatility index for the S&P 500 options, wandered sideways with the market this week, hitting intraday lows at 17.2% and intraday highs at 20.4%, before closing Friday at 18.2%. Traders remain on guard and are buying protection.

I have plotted the prices of the IWM ETF below to track the Russell 2000 index. The owners of Russell have priced everyone out of Russell 2000 index and option data. That is why I plot the IWM prices. IWM closed Friday at 221.05, down 1.47 or 0.7% on the day, but managed to close up 0.3% for the week. I don’t want to read too much into this, but it is at least worth noting that IWM booked a positive gain for the week while the S&P 500 blue chips lost 0.3%.

The NASDAQ Composite index didn’t fare as well as the S&P 500 or the Russell 2000, closing Friday at 14,673, down 106 points on the day or -0.7% and down 1.0% for the week. NASDAQ’s trading volume continued to come in below its 50 dma and decreased steadily all week.

Roughly speaking, we have endured a week of severe declines, followed by a strong recovery week and now we have just traded sideways all week. Maybe the market is trying to digest the cost data and fears of inflation. The FOMC met this week and continues to assure the market that they aren’t preparing to raise the federal discount rate and are continuing to pump money into the economy by buying bonds each week. Market gurus are split on whether inflation will be good or bad for the stock market. I think both groups are probably correct at the extremes. I still remember moving to Chicago in 1980 and trying to buy a house at 13% interest rates. That puts a damper on the market.


I watched a presentation from Merrill Lynch this week (I know, but they remain Merrill Lynch to me). An interesting tidbit: they predict corporate earnings will grow by over thirty percent during the remainder of this year. They base that prediction on a continuing recovery from the economic shutdown. If they are correct, that will definitely fuel the market’s climb higher.

I started the week 54% in cash and ended the week at 74%. This result surprised me as I computed it just now. As I analyze my cash basis, I realize I entered several new positions this week, but scaled back the size from what would be normal for me. I have also allowed several naked puts to expire worthless this week without rolling them out. I am reminded of the day traders who always go to cash at the end of each trading session to avoid overnight risk. I am wary of weekends. My rational mind sees pretty solid economic numbers but the whipsawing of this year’s market has left me a little gun shy (I don’t hunt but it is a very appropriate expression).

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Written by Dr. Duke

Category: Dr. Duke's Blog

Created: 16 July 2021

Last Updated: 16 July 2021

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The Standard and Poors index (SPX) posted a very bearish day today, closing at 4327, down 33 points or -0.8%. SPX opened the week at 4372 for a weekly loss of 1%, with most of that loss occurring today. SPX set a new all-time high on Monday, but weak trading followed the rest of the week. The trading volume of the S&P companies continued to run below the 50-day moving average (dma).

VIX, the volatility index for the S&P 500 options, teased with a relatively low level of volatility around 16% all week, but spiked up to 18.5% today. That gives us something to think about over the weekend.

The Russell 2000 index has been trading much more weakly over the past four months when compared to the large cap stocks that dominate the S&P 500 and the NASDAQ Composite. The ETF for the Russell 2000, IWM, posted a particularly bearish week, closing today at 214.95, down 1.2% on the day and posted a 4.7% loss for the week. Look out below!

The NASDAQ Composite index posted a very bearish week, similar to the Russell 2000 index. NASDAQ closed at 14427, down 116 points or -0.9% and down 2.2% for the week. Similar to the S&P 500, NASDAQ’s trading volume continued its below average track record and decreased significantly today.

This year has been a story of fits and starts with traders being whipsawed in and out of the markets. The bears took a firm hold on the markets this week and very few stocks could resist the pull. AAPL posted positive gains earlier in the week, including a strong gap opening higher on Wednesday, but finally succumbed today.


I started the week 50% in cash and ended the week at 58%. With a week like this one, I was closing more trades than opening them. This market remains nervous and twitchy. Be very cautious.