Dr. Duke's Blog

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Written by Dr. Duke

Created: 08 March 2025

The Standard and Poors 500 index (SPX) closed today at 5770, up 32 points or 0.6%. SPX opened the week at 5968, down 3.3% for the week. SPX appeared to find support at the 200-day moving average (dma) on Thursday and bounced higher on Friday. Trading volume ran above the 50 dma all week.

VIX, the volatility index for the S&P 500 options, opened the week at 19.8%, spiked up over 26% on Friday, but closed at 23.4%, down 1.5 points or -6.0%.

I track the Russell 2000 index with the IWM ETF, which closed today at 206, up 0.7 points or 0.3%. IWM opened the week at 215 for a weekly loss of 4.2%. IWM trading volume been running above the 50 dma for the last seven trading sessions. One has to go back to August and September of 2024 to find similar lows for IWM.

The NASDAQ Composite index closed today at 18,196, up 127 points or 
0.7%. NASDAQ opened the week at 18,923, setting up a weekly loss of 3.8%. NASDAQ’s trading volume ran at or below the 50 dma this week. NASDAQ broke its 200 dma on Monday and continued to decline until today.
 
The overall markets hit recent highs on 2/19 and continued to decline this week. The S&P 500 has now declined 6.1%; NASDAQ Composite is down 9.5% and the Russell 2000, as measured by IWM, is now down 9.3%. Although technical analysts have traditionally viewed corrections as declines equal to or greater than 10%, I think it is fair to say the overall market is in correction with both the NASDAQ and the Russell 2000 down approximately ten percent.

Trading volume is another parameter to watch as we assess the markets. SPX’s volume ran above the 50 dma all week. The trading volume of the Russell 2000 has exceeded its 50 dma for the last seven trading sessions. Only the trading volume of the NASDAQ Composite has tracked along or even slightly below the 50 dma.

Investors Business Daily downgraded their recommended stock market exposure from 20-40% to 0-20% on Monday, consistent with a correction assessment.

Be cautious. There is nothing wrong with holding cash.

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Written by Dr. Duke

Created: 01 March 2025

The Standard and Poors 500 index (SPX) closed today at 5955, down 93 points or 1.6%. SPX opened the week at 6027, down 1.2% for the week. The recovery on Friday helped that number. At Thursday’s close SPX was down 2.7% for the week. Trading volume ran along the 50-day moving average (dma) most of the week, but spiked higher on Friday’s recovery.

VIX, the volatility index for the S&P 500 options, opened the week at 18.1% and spiked up to 22% on Friday, but closed the day at 19.6%.

I track the Russell 2000 index with the IWM ETF, which closed today at 214.7, up 2.3 points or 1.1%. IWM opened the week at 218.8 for a weekly loss of 1.9%. IWM trading volume ran moderately above the 50 dma most of the week.

The NASDAQ Composite index closed today at 18,847, up 303 points or 
1.6%. NASDAQ opened the week at 19,590, setting up a weekly loss of 3.8%. NASDAQ’s trading volume ran at or below the 50 dma this week. Most traders have been complaining about the choppiness of the markets this year, but that tune changed this week. Now the central questions are 1) Is this the beginning of a correction?, and 2) How low can it go?


 
The overall markets hit recent highs on 2/19 and hit a low yesterday (2/27). The S&P 500 had declined 4.6% by Thursday but recovered to a loss of 3.1% on Friday. The NASDAQ Composite posted worse declines of 7.7% through Thursday and 6.2% through Friday. The Russell 2000, as measured by IWM, posted declines of 6.5% and 5.5%, respectively.

Technical analysts have traditionally viewed corrections as a decline equal to or greater than 10%. Lesser declines are usually referred to as either pullbacks or pauses. By those guidelines, we aren’t in a correction yet, but these declines aren’t minor either.

Trading volume is another parameter to watch as we assess the markets. SPX’s volume spiked higher on Friday as the market recovered. That was a good sign, but trading volume on both NASDAQ and IWM ran long the 50 dma. However, some volume gains could be the result of funds rebalancing at month end.

Investors Business Daily downgraded their recommended stock market exposure on Thursday from 40-60% to 20-40%. At these levels, IBD recommends moving largely to cash in preparation for a possible correction. Be cautious. There is nothing wrong with holding moderately large amounts of cash.

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Written by Dr. Duke

Created: 21 February 2025

The Standard and Poors 500 index (SPX) closed today at 6013, down 108 points or 1.7%. SPX opened the week at 6122, down 1.8% for the week. Trading volume ran along the 50-day moving average (dma) all week and was only up modestly on today’s sell-off. The only good news was SPX finding support at the 50 dma.

VIX, the volatility index for the S&P 500 options, opened the week at 15.6% and trended sideways until today when VIX spiked to 19% and closed the day at 18.2%.

I track the Russell 2000 index with the IWM ETF, which closed today at 217.8, down 6.5 points or -2.9%. IWM opened the week at 226.2 for a weekly loss of 3.7%. IWM trading volume ran well below the 50 dma all week but spiked to almost double the 50 dma today.

The NASDAQ Composite index closed today at 19,524, down 438 points or 
-2.2%. NASDAQ opened the week at 20,041, setting up a weekly loss of 2.5%. NASDAQ’s trading volume ran along the 50 dma this week.

As I discussed in the last newsletter, this year’s markets have been very choppy, making it challenging for traders. The new administration is moving at record speed, and I think that creates uncertainty about the future. The market effectively prices the future into today’s trading and institutional traders are uncertain what may be around the corner. These changes may be good for the economy and the markets, but that is difficult to ascertain with much confidence.

The FOMC is remaining calm and deliberate and clearly does not want to release the interest rate brakes too quickly.

The S&P 500 is an excellent measure for the overall market, and it has been extremely volatile this year. SPX lost nearly two percent today alone. On the other hand, look at the market’s trading volume. It was only up modestly today. Trading volume actually declined on the NASDAQ Composite. The signs of institutional traders “throwing in the towel” aren’t there - at least not yet.

Each day brings another explanation for the weakness. Yesterday it was blamed on the weak forward guidance Walmart delivered Wednesday evening. Today it was blamed on reports of United Health being the subject of a DOJ investigation into Medicare billing. The market is nervous and tips over easily. Investors Business Daily downgraded their recommended stock market exposure yesterday and then again today.

Be cautious.

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Written by Dr. Duke

Created: 07 February 2025

The Standard and Poors 500 index (SPX) closed today at 6026, down 58 points, nearly one percent. SPX opened the week at 5970, +0.9% for the week. It is interesting to note the pattern: each of the three Fridays traded up to the all-time high of 6100 on 12/06. It broke through on 1/24 but fell short on 1/31 and again today. Trading volume was barely above the 50-day moving average (dma) this week.

VIX, the volatility index for the S&P 500 options, opened the week at 20.4% and moved lower, closing Thursday at 15.5% but then gained one point to close today at 16.5%.

I track the Russell 2000 index with the IWM ETF, which closed today at 226, down nearly three points or -1.2%. IWM opened the week at 222 for a weekly gain of 1.8%. IWM trading volume spiked above the 50 dma Monday and today. The Russell 2000 isn't leading the market higher or lower.

The NASDAQ Composite index closed today at 19,523, down 269 points or 
-1.4%. NASDAQ opened the week at 19,215, setting up a weekly gain of 1.6%. NASDAQ’s trading volume rose above the 50 dma on Monday, but ran well below average the balance of the week.

The markets have been very choppy this year, with the S&P index making strong runs for a few days, then giving it all back and then repeating the process. That makes it very difficult for traders to lock in gains, unless you are a day trader. I think this choppiness is principally due to three factors:

• The ultimate economic effect of Trump’s tariff threats,



• Federal reserve discount rate changes, and



• The economic fallout of the global AI competition.

All of these three issues may have significant economic effects, and the market is largely clueless which way it might go. The new administration is moving at record speed and that thrills some but terrifies others, especially those who have been benefiting from federal grants.

The FOMC is remaining calm and deliberate and clearly does not want to release the brakes too quickly.

The effect of DeepSeek has certainly gotten the world’s attention, and especially our own high-tech companies, who may have assumed their only competition was within their exclusive “club”.

The ultimate impacts of all of the above are largely unknown at this time and that has the market spooked. It does not like uncertainty. That foretells a rough ride for those of us who actively trade the markets. Be cautious and be nimble. "Hold and hope" may be especially dangerous to your financial health.

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Written by Dr. Duke

Created: 02 February 2025

The Standard and Poors 500 index (SPX) closed today at 6041, down 31 points or 0.5%. SPX opened the week at 5969, gaining 1.2% for the week. Today’s trading broke the earlier all-time high at 6119 on 1/23, but it could not hold that high. Trading volume ran above the 50-day moving average (dma) all week.

VIX, the volatility index for the S&P 500 options, opened the week at 18.8% and moved lower all week, but rose almost one point to close today at 16.4%.

I track the Russell 2000 index with the IWM ETF, which closed today at 226.5, down 2.1 points or -0.9% on the day. IWM opened the week at 220.7 for a weekly gain of 1.7%. IWM trading volume spiked above the 50 dma today. IWM has traded in a tight range of 225-230 for the past eleven days.

The NASDAQ Composite index closed today at 19,627, down 54 points or 
-0.3%. NASDAQ opened the week at 19,234, setting up a weekly gain of 2.0%. NASDAQ’s trading volume ran below the 50 dma most of the week, but spiked higher today.


The Stock Trader’s Almanac tracks three primary indicators for predictions for the annual gains for 2025:

• The Santa Claus rally, the last five trading days of December and the first two days of January, failed this year, down 0.7%.


• The first five days of January trading was positive at +0.6%.


• The January Barometer, which monitors the full month’s trading gain or loss, came in at +2.3% this year.

This combination of a negative Santa Claus rally, with a positive first five days and a positive January Barometer has only occurred three times with subsequent average annual gains of 15%.
However, just focusing on the January Barometer alone has a solid track record. Positive returns in January are followed by positive annual returns 89% of the time.

While the Stock Trader’s Almanac prediction for the year is positive, the choppiness we have observed thus far this year has been principally due to three factors:

• The ultimate economic effect of Trump’s tariff threats,


• Federal reserve discount rate changes, and


• The economic fallout of the global AI competition.

That leaves me long term bullish, with a strong dose of caution surrounding key economic news. Thus, I expect a positive 2025, but laced with significant choppiness, much as we have seen this past month. Be cautious.


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Written by Dr. Duke

Created: 18 January 2025

The Standard and Poors 500 index (SPX) closed today at 5997, up 59 points or 1.0%. SPX opened the week at 5782, gaining 3.7% for the week. Trading volume ran near the 50-day moving average (dma) all week.

VIX, the volatility index for the S&P 500 options, opened the week at 21.2% and closed today at 16.0%, down almost twenty five percent today.

I track the Russell 2000 index with the IWM ETF, which closed today at 224.4, up 3.3 points or 1.5% on the day. IWM opened the week at 220.7 for a weekly gain of 1.7%. IWM trading volume ran close to the 50 dma this week.

The NASDAQ Composite index closed today at 19,630, up 292 points or +1.5%. NASDAQ opened the week at 18,904, setting up a strong weekly gain of 3.8%. NASDAQ’s trading volume ran below the 50 dma most of the week, jumping up a bit today. 

The last five trading days of December and the first two days of January have become known as the Santa Claus rally. Unfortunately, Santa didn’t come to Wall Street this year (down 0.7%).

The Stock Trader’s Almanac also tracks the first five days of January trading as a forecast for the year ahead. Positive gains for the first five days of January have preceded a positive year for the S&P 500 index 83% of the time. the first five days of January trading came in at +0.6% this year.



Now we wait for the January Barometer, which tracks the full month’s trading gain or loss. A positive January Barometer has predicted a positive S&P 500 gain with 73% accuracy.

I have been frustrated in my trading the markets since the highs in early December – many false starts and quick turnarounds, shaking me out of trades. This week's gains give me some hope for the new year.

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Written by Dr. Duke

Created: 03 January 2025

The Standard and Poors 500 index (SPX) closed today at 5942, up 74 points or 1.3%. SPX opened the week at 5921, gaining 0.4% for the week. Trading volume ran well below the 50-day moving average (dma) all week, typical of holiday markets.

VIX, the volatility index for the S&P 500 options, opened the week at 17.2% and closed today at 16.1%, down almost 10% today.

I track the Russell 2000 index with the IWM ETF, which closed today at 224.4, up 3.3 points or 1.5% on the day. IWM opened the week at 220.7 for a weekly gain of 1.7%. IWM trading volume ran close to the 50 dma this week.

The NASDAQ Composite index closed today at 19,622, up 341 points or 1.8%. NASDAQ opened the week at 19,460, setting up a modest weekly gain of 0.8%. NASDAQ’s trading volume ran above the 50 dma all week.

The Santa Claus rally was discovered by Yale Hirsch, the founder of the Stock Trader’s Almanac. The last five trading days of December and the first two days of January have averaged a positive 1.3% gain since 1969 through 2023. Unfortunately, Santa didn’t come to Wall Street this year (down 0.7%).

The Stock Trader’s Almanac also tracks the first five days of January trading as a forecast for the year ahead. Positive gains for the first five days of January have preceded a positive year for the S&P 500 index 83% of the time. After two days, SPX is up 0.7%.

The January Barometer tracks the full month’s trading gain or loss. A positive January Barometer has predicted a positive S&P 500 gain with 73% accuracy.

This market has been challenging to trade since the S&P 500 index hit its most recent high on December 6th. SPX traded lower almost immediately and then did a quick turnaround and almost recovered that previous high. But then the market gave it all back during the closing days of December. It has been very frustrating to see tentative gains and then watch them disappear just as quickly. Fortunately, our Apple spread survived the chaos with a nice gain.

Today’s positive market gains give me hope for a better new year.

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Written by Dr. Duke

Created: 06 December 2024

The Standard and Poors 500 index (SPX) closed today at 6,090, up 15 points or +0.3%. SPX opened the week at 6,040, gaining 0.8% for the week. Trading volume ran along the 50-day moving average (dma) all week.

VIX, the volatility index for the S&P 500 options, opened the week at 14.1% and closed today at 12.8%, down almost 6% today.

I track the Russell 2000 index with the IWM ETF, which closed today at 238.9, up almost one point or +0.4% on the day. IWM opened the week at 242.2 for a weekly loss of -1.4%. IWM steadily moved lower this week. IWM trading volume ran below the 50 dma and declined slightly as the week worn on.

The NASDAQ Composite index closed today at 19,860, up 160 points or 
+0.8%. NASDAQ opened the week at 19,255, setting up a nice weekly gain of 3.1%. NASDAQ’s trading volume ran above the 50 dma on Wednesday and Thursday but ran below average the balance of the week.

The blue chip markets, SPX and NASDAQ traded higher this week, but the small caps of the Russell 2000 index, as represented by IWM, declined steadily all week. Russell’s weekly loss may be a red flag for markets next week. My trading this week has been generally very positive, whether it be the selling calls and puts in the Conservative Income trading service or the SPX Zero DTE options trading service. In the personal account that mirrors the zero dte trading service, I gained $4,600 this week. Trading the zeros is intense and you must diligently manage the risk, but it can be quite lucrative.

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Written by Dr. Duke

Created: 22 November 2024

The Standard and Poors 500 index (SPX) closed today at 5,969, up 21 points or +0.4%. SPX opened the week at 5,874, gaining 1.6% for the week. Trading volume ran along the 50-day moving average (dma) all week.

VIX, the volatility index for the S&P 500 options, opened the week at 16.6% and closed today at 15.2%, slightly higher mid-week, but VIX declined today.



I track the Russell 2000 index with the IWM ETF, which closed today at 238.7, up four points or +1.9% on the day. IWM opened the week at 229.2 for a weekly gain of +4.1%. IWM led the broad market averages higher this week. IWM trading volume declined slightly as the week worn on.

The NASDAQ Composite index closed today at 19,004, up 61 points or 
+0.2%. NASDAQ opened the week at 18,718, setting up a weekly gain of 1.5%. NASDAQ’s trading volume ran above the 50 dma all week except for Wednesday.

The markets reversed course from last week and traded higher this week. The S&P 500 stocks rose 1.6% this week; the NASDAQ Composite tacked on 1.5%. But the Russell 2000 index was running hard, up 4.1%. Russell’s gain is very encouraging as this index consists of smaller high beta stocks. These are the stocks the large funds turn to build their returns when they anticipate smooth sailing ahead. Conversely, they are the first stocks to be sold when the storm clouds are feared.

As you may recall from last week’s newsletter, I was seeing some signs of a possible recovery this week after the ugliness last week. However, I am a little scarred from the last couple of months of a very choppy market. I am focusing on the large cap tech stocks for a safe vehicle for this apparent bull run.

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Written by Dr. Duke

Created: 15 November 2024

The Standard and Poors 500 index (SPX) closed today at 5,871, down 79 points or -1.3%. SPX opened the week at 6,009, losing 2.3% for the week. Trading volume spiked up on the day following the election and declined the rest of that week and into this week, although it spiked up above the 50-day moving average (dma) today.

VIX, the volatility index for the S&P 500 options, opened the week at 15.3% and declined steadily through Thursday’s close at 14.3%, but rose today to 15.1%.

I track the Russell 2000 index with the IWM ETF, which closed today at 228.5, down 3.5 points or -1.5% on the day. IWM opened the week at 240.5 for a weekly loss of -5.0%. IWM steadily declined every day this week. IWM trading volume ran at or above the 50 dma all week but spiked higher Tuesday and today.

The NASDAQ Composite index closed today at 18,680, down 428 points or -2.2%. NASDAQ opened the week at 19,355, setting up a substantial weekly loss of 3.5%. NASDAQ’s trading volume has run well above the 50 dma since the day of the election through today.

The markets traded higher after the election but cooled substantially this week. At least part of that decline belongs to FOMC chairman Powell’s comments. He said the Fed may not feel as pressured to reduce interest rates further this year since the economy is doing so well. Boston Fed President Collins piled on, saying a December rate cut is “not a done deal”. That took the steam out of this post-election bull run.

Weekly losses for the S&P 500 stocks, the NASDAQ Composite and the Russell 2000 index came in at  -2.3%, -3.5% and -5.0%, respectively. In spite of these large declines, IBD’s recommended stock market exposure remains at 80-100% today.

This week was just one more example of how difficult it has been to trade this market. Just when you think a bullish trend has begun, the rug gets pulled out from under you. The S&P 500 index gapped lower at today’s opening and traded lower by 1.3%, with a large spike in trading volume. Could this be capitulation as many traders throw in the towel? NASDAQ also gapped open lower today and dropped 2.2% before finding support at its July high. NASDAQ’s trading volume has exceeded its 50 dma all week. The Russell 2000, as measured by the IWM, appeared to find support at its mid-October high concurrently with a spike in trading volume.

This gives me some hope for a recovery next week, but I may be grasping at straws.