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The Standard and Poors 500 index (SPX) closed today at 5,865, up 23 points or +0.4%. SPX opened the week at 5,830, gaining 0.6% for the week. The S&P 500 index closed today at an all-time high. Trading volume slowly declined this week.
VIX, the volatility index for the S&P 500 options, declined steadily this week, opening Monday at 20.8% and closing today at 18.0%. Historically, this level of volatility is moderately high for a bullish market. Is the election creating some anxiety?
I track the Russell 2000 index with the IWM ETF, which closed today at 226, down a half point or -0.2% on the day. IWM opened the week at 221 for a weekly gain of 2.2%. Unlike the S&P 500 and NASDAQ, this index is not yet up to its
all-time high from 2021.
The NASDAQ Composite index closed today at 18,490, up 116 points or
+0.6%. NASDAQ opened the week at 18,427, setting up a small weekly gain of 0.3%. NASDAQ closed at an all-time high on Monday and almost reached that level today. NASDAQ’s trading volume was roughly flat with a slight decline this week.
The markets are essentially bullish with both the S&P 500 index and NASDAQ hitting all-time highs this week. But volatility remains moderately elevated and the Russell 2000 index has not yet matched its previous all-time high. This week’s trading was largely sideways and choppy. The S&P 500 traded within the channel formed by 5800 and 5875.
The Russell 2000 index traded strongly higher since October 10th but pulled back a bit over the past two days. Russell remains the only broad market index that has not set a new all-time high. IBD’s market assessment is “all in” with its recommended stock exposure of 80-100% and the Stock Traders Almanac triggered its seasonal buy signal last week.
I remain cautious, although I am unsure of the root cause. The choppy nature of the recent market is a factor and maybe the hateful drama during this election cycle may be coloring my vision of the markets.
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The Standard and Poors 500 index (SPX) closed today at 5,815, up 35 points or +0.6%. SPX opened the week at 5,738, gaining 1.3% for the week. Trading volume slowly declined this week.
VIX, the volatility index for the S&P 500 options, declined slightly this week, opening Monday at 20.8% and closing today at 20.5%. This level of volatility seems high for a rising market. Is the market apprehensive of the upcoming election?
I track the Russell 2000 index with the IWM ETF, which closed today at 221.3, up four points or +2% on the day, and up +1.2% for the week. The strong rise in IWM today is a bullish signal.
The NASDAQ Composite index closed today at 18,343, up 61 points or
+0.3%. NASDAQ opened the week at 18,080, setting up a strong weekly gain of +1.5%. NASDAQ’s trading volume was flat this week.
One would think that the announcement of a 50-basis point rate reduction by the FOMC three weeks ago would have effectively ended all of that Fed noise. But it appears the market is obsessed. One example this week: the CPI posted another lower number and the annual rate of change for CPI is now +2.4%. I wasn’t long ago that it was over 3%. But the market slumped after the CPI announcement because the monthly change of 0.2% was "above forecasts". It was one more example of this market being very difficult to please. Maybe the uncertainty of the election is bubbling up. That may explain why we have a 20% VIX while the market is trading higher.
The most positive news this week was the Russell 2000 index finally waking up with a strong day, rising over two percent. These are the classic high beta stocks that the institutions and hedge funds use to boost their results in bull markets.
The S&P 500 set a new all-time high today but NASDAQ remains below its
all-time high from July 10th. IBD’s market assessment stands at its most bullish level, with stock exposure of 80-100%. The Stock Traders Almanac has triggered its seasonal buy signal.
I’m unsure why I am uneasy.
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The Standard and Poors 500 index (SPX) closed today at 5,626, up 30 points or +0.5%. SPX opened the week at 5,442, gaining 3.4% for the week, about the same magnitude as its loss last week. Trading volume declined over the last three trading sessions this week.
VIX, the volatility index for the S&P 500 options, steadily declined this week, opening the week at 21.3% and closing today at 16.6%. I would normally consider this to be moderately high volatility but after the August correction, this feels low.
I track the Russell 2000 index with the IWM ETF, which closed today at 217, up five points or +2.5%. IWM gapped open higher twice this week, posting a gain of 4.3%.
The NASDAQ Composite index closed today at 17,684, up 114 points or
+0.7%. NASDAQ opened the week at 16,836, setting up a strong weekly gain of 5%. NASDAQ’s trading volume remained at or below the 50 dma all week.
This week’s trading was almost the exact opposite of last week. The S&P 500 gained 3.4%, but NASDAQ and the Russell 2000 were hot at +5.0% and +4.3%, respectively.
I believe the market has presumed a rate reduction from the Fed next week. As I see interviews and reports on the financial networks, the argument I hear is not whether they will announce a rate reduction, but whether it will be a reduction of 25 or 50 basis points. The year over year CPI numbers now stand at +2.5%. While that is moving in the right direction, Jerome Powell has been very firm about a target of 2%. If the Fed holds pat next week, it could be ugly.
I closed my September SPY condors for +12.2% and the September SPX iron condors for +16.7% today, but I will wait until after the Fed announcement to open the November positions for those services. On the other hand, if the FOMC reduces rates by 50 basis points next Wednesday, we may see new market highs.
I will close our QQQ iron condor before the announcement next week. Be cautious; take risk off the table where you can. We could have some rough seas.
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The Standard and Poors 500 index (SPX) closed today at 5,730, down 11 points or -0.2%. SPX opened the week at 5,615, gaining 2.0% for the week. Trading volume spiked today for triple witching expiration.
VIX, the volatility index for the S&P 500 options, opened today at 16.3% and closed at 16.2%.
I track the Russell 2000 index with the IWM ETF, which closed today at 222, down two points on the day, but up +1.8% for the week.
The NASDAQ Composite index closed today at 17,948, down 66 points or
-0.4%. NASDAQ opened the week at 17,574, setting up a strong weekly gain of 2.1%. NASDAQ’s trading volume spiked today due to triple witching expiration.
This week’s trading was all about the FOMC. Monday through Wednesday at 2:00 pm ET was roughly a sideways market, waiting on the Fed. The announcement of a 50-basis point rate reduction appeared to be just what the market wanted, but the market traded down after the announcement.
Yesterday was an altogether new story. It was as though sleeping on the rate reduction convinced the market that all was well. SPX gapped open by over 85 points and then tacked on another eleven points.
However, the market woke up with a hangover this morning and decided Thursday’s party was a bit excessive. The market opened lower and traded down significantly. SPX tried to get back to its opening late in the day but couldn’t make it happen. SPX closed for an eleven-point loss.
The positive summary is that the S&P 500 set a new all-time high on Thursday and didn’t trade down too badly today, closing roughly at Thursday’s open.
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The Standard and Poors 500 index (SPX) closed today at 5,408, down 95 points or -1.7%. SPX opened the week at 5,624, closing down 3.8% for the week. Trading volume was above the 50-day moving average (dma) Tuesday and Friday but below average on Wednesday and Thursday.
VIX, the volatility index for the S&P 500 options, closed today at 22.4%, up 2.5 points. VIX opened Tuesday at 15.8% and spiked up over 20% and stayed in that neighborhood the balance of the week.
I track the Russell 2000 index with the IWM ETF, which closed today at 208, down four points or -1.9%. IWM was down almost five percent this week.
The NASDAQ Composite index closed today at 16,691, down 437 points or
-2.6%. NASDAQ opened the week at 17,585, setting up a weekly loss of 5%. NASDAQ’s trading volume remained at or below the 50 dma all week.
I often make the mistake of looking for rational explanations for the market moves. When SPX dropped significantly earlier this week, the explanation by the talking heads was that the ADP private payrolls number at 99k was “below expectations”. Today’s explanation was that the jobs report at 142k jobs, up from last month’s 89k was “weak”. Last month was weak; this month was up.
Last week, I relayed the Stock Trader’s Almanac citation to you that September is historically the weakest month of the year for the stock market. Maybe I should have paid attention.
Today’s market decline seemed extreme to me. In particular, if one watched the SPX one minute chart today, it was uniformly down all day. That is unusual; normally, there is an ongoing tug of war with several ups and downs.
Based on my assumption of an extreme in trading today, I held several positions. We’ll see if that was a mistake.
