Dr. Duke's Blog

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Written by Dr. Duke

Created: 08 June 2024

The Standard and Poors 500 index (SPX) closed today at 5347, down 6 points or +0.1%. However, SPX was up nearly one percent for the week. SPX set a new all-time high on Wednesday, and the index chopped sideways the balance of the week. Trading volume declined steadily all week, remaining below the 50-day moving average (dma).

VIX, the volatility index for the S&P 500 options, opened the week at 13.1% and spiked up to 14.3% on Monday, but declined the rest of the week to close today at 12.2%. This level of volatility is moderately high for a bullish market; this market is nervous and ready to sell to preserve gains on any pretext.

I track the Russell 2000 index with the IWM ETF, which closed today at 201.2, down 2.3 points or -1.1%. IWM opened the week at 207.5 for a weekly loss of 3.0%. IWM broke down through its 50 dma today. SPX and NASDAQ are setting new market highs, but the Russell 2000 index is declining.

The NASDAQ Composite index closed today at 17,133, down 40 points or -0.2%. NASDAQ opened the week at 16,866 for a weekly gain of 1.6 percent. Trading volume ran below the 50 dma all week, similar to the S&P 500 index.

The market continues to be obsessed with real or imagined signals from Powell and the other members of the FOMC. Nearly all of the large moves in the market this year, higher or lower, have been triggered by perceptions of the Fed’s plans for interest rates. The street sees rate reductions as a return to easy money, economic expansion and a strong stock market. That promise is always appealing. The CME FedWatch now rates the probability of a rate reduction in the FOMC meeting in September at 71%. That estimate is up from 47% the previous week. That appeared to trigger Wednesday’s strong move higher. This bullish move is being led by a small number of high-tech stocks. While the S&P 500 and the NASDAQ were setting new all-time highs, the small cap stocks of the Russell 2000 index broke down through the 50 dma.

This bull market is fragile. If the large players were really confident, we would see strong buying of the high beta stocks of the Russell 2000. This market is riding on the backs of the so-called Magnificent Seven. That is probably the explanation of the below average and declining trading volume on SPX and NASDAQ.

It doesn’t make sense to sit on the sidelines but keep the fragility of this market in mind. Keep a close watch on your positions.

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Written by Dr. Duke

Created: 24 May 2024

The Standard and Poors 500 index (SPX) closed today at 5305, up 37 points or +0.7%. SPX was unchanged for the week. SPX set a new all-time high on Tuesday, but the index lost all of that and more on Thursday. Trading volume continues to run well below the 50 day moving average (dma).

VIX, the volatility index for the S&P 500 options, opened the week at 12.3%, spiked as high as 13.4 on Thursday, but closed today at 11.9%. Even Thursday’s spike on the VIX was less than I would have expected for that sudden sell-off.

I track the Russell 2000 index with the IWM ETF, which closed today at 205, up 2.2 points or 1.1%. IWM opened the week at 208 for a weekly loss of 1.4%. IWM really took it on the chin on Thursday, almost reaching its 50 dma. Even today’s bullish move higher barely recovered half of yesterday’s loss. The Russell 2000 isn’t leading the bulls.

The NASDAQ Composite index closed today at 16,921, up 185 points or +1.1%. NASDAQ opened the week at 16,702 for a weekly gain of 1.3 percent. Trading volume ran above the 50 dma all week, in contrast to the S&P 500 index.

The current market appears to be largely driven by comments from Powell or one of the other members of the FOMC. Toward the end of 2023, many Wall Street analysts convinced themselves that the Fed would be reducing interest rates this year, starting in the first quarter. All of the large and sudden moves in the broad market indices this year have been driven by comments or rumors that rate reductions were not imminent. The scare this week came from comments of one of the FOMC members that a rate increase might be in order if inflation isn’t curtailed soon. The street sees rate reductions as a return to easy money, economic expansion and a strong stock market. That promise is always appealing.

May has been a strong month in spite of Thursday’s temper tantrum. But this market remains very volatile and twitchy. It doesn’t take much to tip it one way or the other. Neutral to bullish trades are still working but keep the stops close.

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Written by Dr. Duke

Created: 17 May 2024

The Standard and Poors 500 index (SPX) closed today at 5303, up six points or +0.1%. SPX opened the week at 5233, gaining 1.3% for the week. SPX set a new all-time high on Wednesday, but trading volume has remained below the 
50 day moving average (dma) for the past two weeks.

VIX, the volatility index for the S&P 500 options, opened the week at 13.3% but declined all week, closing today at 12%. Normally a declining VIX would accompany a bullish move higher, but below average trading volume doesn’t fit that scenario.

I track the Russell 2000 index with the IWM ETF, which closed today at 208, nearly flat on the day, up 0.07%. IWM opened the week at 206 for a weekly gain of one percent. Normally, the Russell 2000 leads bull markets. Russell is off its high as the S&P 500 hits an all-time high?

The NASDAQ Composite index closed today at 16,686, up 12 points or +0.07%. NASDAQ opened the week at 16,400 for a weekly gain of 1.7 percent. Trading volume spiked well above the 50 dma on Tuesday and stayed high all week.

The old adage, “sell in May and go away” doesn’t seem to fit this year. The S&P 500 stocks are up 5.4% in May. But traders remain skittish, spiking up or down on the latest comments from Powell or one of the other members of the FOMC. Many of the comments appear to be pushing interest rate cuts later in the year, a far cry from three cuts in 2024 that was once the prediction, or the dream, of many on Wall Street.

May has been a great month for the bulls so far, but I have trouble believing the economy is on a solid foundation. I have always attempted to rationally analyze the market, which I suppose reflects my training in the sciences. But I often find myself trading what the market gives me, not what I think the market should be doing. Whether I think our economy is great right now doesn’t really matter. The bulls are running. I am on the train.

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Written by Dr. Duke

Created: 03 May 2024

The Standard and Poors 500 index (SPX) closed today at 5128, up 64 points or +1.3%. SPX opened the week at 5114, gaining 0.3% for the week. The FOMC meeting, announcement and press conference on Wednesday encouraged traders and the market spiked on Wednesday and continued higher yesterday and today. SPX gapped open by 59 points this morning and recovered the index’s 50-day moving average (dma). Trading volume moved higher this week, but barely made it to the 50 dma today.

VIX, the volatility index for the S&P 500 options, closed today at 13.5%, down over one point or -8%. VIX opened the week at 14.8% but spiked as high as 16% during the week.

I track the Russell 2000 index with the IWM ETF, which closed today at 201.9, up two points on the day or one percent. IWM opened the week at 198 and gained 2% this week.

The NASDAQ Composite index closed today at 16,156, up 315 points or +2%. NASDAQ gapped open higher this morning by 306 points, almost 2%.  NASDAQ opened the week at 16,007 for a weekly gain of one percent. Trading volume barely reached the 50 dma earlier this week, and steadily declined after Wednesday, closing 25% below the 50 dma today.

The markets have been very nervous for several weeks, fearing a hard landing for the economy if the Fed continued to raise the discount rate. Many analysts were hoping for a rate reduction but that didn’t happen. However, during the press conference, Powell suggested more rate hikes may not be necessary, although he also cast doubt on any reductions until inflation has clearly declined. That message seemed to resonate with the market, spiking on Wednesday afternoon, although it couldn’t hold those highs. But after sleeping on the news, traders turned in a solid gain on Thursday and then the markets gapped open strongly this morning.

The S&P 500, NASDAQ and the Russell 2000 indices all recovered their 50 day moving averages today.

I ventured out yesterday and today with some bullish trades, but I still have a lot of cash on the sidelines. Be careful out there. Election years are usually bullish, but the economy is fragile, and the federal debt is out of control. Traders are nervous.

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Written by Dr. Duke

Created: 19 April 2024

April 15th is always a day of mourning, but that mood was contagious this week! The Standard and Poors 500 index (SPX) closed today at 4967, down 44 points or -0.9%. SPX opened the week at 5150, losing 3.7% just this week. The S&P 500 index is now down 5.7% from its high earlier this year. Trading volume finally exceeded the 50-day moving average (dma) today.

VIX, the volatility index for the S&P 500 options, closed today at 18.7% after spiking intraday at 21.3%. VIX opened the week at 16.9%. I think it is fair to say that the complacency of the large institutional traders is turning into serious concern.

I track the Russell 2000 index with the IWM ETF, which closed today at 193.14, and actually gained less than a point on the day – the only broad market index to do so today. IWM ended the week with a 3.1% loss.

The NASDAQ Composite index closed today at 15,282, down 320 points or 
-2.1%. NASDAQ opened the week at 16,276 for a weekly loss of 6.1%. Trading volume has followed the same pattern as SPX this year, running well below average. NASDAQ’s trading volume managed to hit the 50 dma today.

The broad market indices have been trending sideways since around the middle of March, but that changed dramatically this week. The S&P 500 lost almost 4% this week; NASDAQ lost 6% and the Russell 2000 was down 3%. The large institutional traders appear to be sitting on the sidelines, judging from their trading volume which has been running below the 50 dma for about the last six weeks. The S&P 500 and NASDAQ broke that trend today, breaking out above the 50 dma.

 The standard terminology for declaring a market correction is s decline of 10% or more. By that measure, we are not yet in correction, but this week is getting our attention. Since their peaks earlier this year, the S&P 500 is down 5.7%, NASDAQ is down 7.6%, the Russell 2000 Index is down 8.8% and the Dow Jones Industrial Average is down 7.0%. I don’t normally follow the Dow simply because of the small number of stocks represented there (30), but I included it for a complete picture of the carnage.

However, there may be a sign of light at the end of the proverbial tunnel. The DJIA and the Russell 2000 were the only indices to turn in positive gains in today’s trading session. That is particularly interesting in the case of Russell. Those are the small to mid-cap, high beta stocks. They normally lead bear markets downward and bull markets upward. The Russell 2000 Index is down 8.8% from its peak on March 28th, leading the declines of all of these market indices. But it may have broken the downward trend. We’ll see. For now, I think I will remain in my bunker.

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Written by Dr. Duke

Created: 05 April 2024

The Standard and Poors 500 index (SPX) closed today at 5204, up 57 points or 1.1%. SPX opened the week at 5258, losing one percent for the week. Yesterday’s tumble was severe and may have been triggered by the interviews of two FOMC members who doubted that rate cuts were coming soon, if at all, this year. That spooked the market, although SPX did recover about half of the losses today. Trading volume just did reach the 50-day moving average (dma) yesterday but ran well below average for the rest of the week.

VIX, the volatility index for the S&P 500 options, closed today at 16.0%, down 0.3 points or 2%. VIX hit highs of 16.9% yesterday and 16.8% today, after opening the week at 13.6%.

I track the Russell 2000 index with the IWM ETF, which closed today at 204.5, down less than one point on the day, but IWM ended the week with a 3% loss. IWM remains well below last week’s highs and below its all-time high of 237 from 2021.

The NASDAQ Composite index closed today at 16,249, up 199 points or +1.2%. NASDAQ opened the week at 16,397 for a weekly loss of one percent. Trading volume followed the same pattern as SPX, running well below average all week with the exception of yesterday when it barely exceeded the 50 dma. Today’s trading volume on NASDAQ was very low. I am unsure why.

The broad market indices have been trending sideways in a tight channel for the last several trading sessions. But this market is apparently very nervous, judging from yesterday’s severe decline. The relatively high levels of VIX suggested as much recently, failing to decline very far in spite of a pretty strong run since November. The large institutional traders appear to be sitting on the sidelines, judging from the trading volume. Even in yesterday’s debacle, volume was running at or below the 50 dma. 

I noted the relative weakness of the Russell 2000 index about two weeks ago. “IWM has been pretty weak for the past 2-3 weeks, even while the broad market indices have continued to advance. A weak Russell 2000 together with below average trading volume are warning us not to get too far out on our skis in this market.”

Yesterday’s midday collapse is ample evidence of this nervous market. SPX managed to recover about half of yesterday’s losses in trading this morning. However, even those advances were timid.

The tentative nature of this market results in higher option premiums, so those of you that like to sell options for income are probably profiting, but many stocks are somewhat schizophrenic: up today and down tomorrow. It makes for a nervous ride.

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Written by Dr. Duke

Created: 22 March 2024

The Standard and Poors 500 index (SPX) closed today at 5234, down 7 points or -0.1%. SPX opened the week at 5155, gaining 1.5% this week. Today’s weakness may have resulted from the FOMC chairman’s speech today. Many traders naively expect Powell to give them a schedule for rate cuts. Trading volume ran well below the 50-day moving average (dma) for the entire week.

VIX, the volatility index for the S&P 500 options, closed today at 13.1% after opening the week at 14.8%.

I track the Russell 2000 index with the IWM ETF, which closed today at 205.1, down almost three points on the day but ended the week with a 1.3% gain. IWM remains near its recent highs set this week around 208 to 209, but remains below its all-time high of 237 from 2021.

The NASDAQ Composite index closed today at 16,429, up 27 points or +0.2%. NASDAQ opened the week at 16,155 for a weekly gain of 1.7%. NASDAQ’s trading volume followed the same pattern as SPX, running well below the 50 dma all week.

The S&P 500 stocks rallied strongly on Wednesday after the FOMC failed to lower the discount rate. That may seem surprising, but the Fed’s reluctance to raise rates higher was a relief for traders. Ever since the December meeting of the FOMC, the institutional traders have been convinced that rates would be declining as early as the first quarter of this year. The FOMC has published the predictions from the committee members of many economic data points with the report issued after every meeting. Traders did not pay much attention to the so-called “dot plot” in the past. After all, what confidence do we have that anyone knows the rate of inflation, interest rates, unemployment and other data for the next four quarters? However, I have noted several authors referring to that dot plot as the Fed’s projection of future interest rates.



The implied volatility of the S&P index, as measured by VIX, declined this week, closing at 13.1%. In the current era of high inflation and extreme U.S. debt levels, the lowest VIX levels seem to be in the range of 12-13%.
The bull run we have witnessed since last November has been strong, but volatility remains relatively high. The other unusual characteristic of this market is the extremely low trading volume. The S&P 500 index and NASDAQ Composite have been trading with volume generally below the 50 dma this year with only a few exceptions. Trading volume ran below average this week on both broad market indices.

I keep a close eye on the Russell 2000 index, as measured by IWM, because the small and mid-cap stocks normally lead bull markets. IWM has been pretty weak for the past 2-3 weeks, even while the broad market indices have continued to advance. A weak Russell 2000 together with below average trading volume are a warning us to not get too far out on our skis in this market.

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Written by Dr. Duke

Created: 09 March 2024

The Standard and Poors 500 index (SPX) closed today at 5124, down 34 points or -0.7%. SPX opened the week at 5131, setting up a weekly loss of 0.1%. Today’s loss appeared to start with this morning’s jobs report. Trading volume has declined all week and has been below the 50-day moving average (dma) for the last two days.

VIX, the volatility index for the S&P 500 options, closed today at 14.7%. VIX opened the week at 13.5% but rose steadily as the market softened and traders looked for protection.

I track the Russell 2000 index with the IWM ETF, which closed today at 207, down a tenth of a point on the day and unchanged for the week. IWM remains above the previous high from 2023 that it broke last week. But IWM remains below its all-time high of 237 from 2021.

The NASDAQ Composite index closed today at 16,085, down 188 points or -1.2%. NASDAQ opened the week at 16,264, for a weekly loss of -1.1%. NASDAQ’s trading volume followed the same pattern as SPX, hitting a high on Tuesday and declining the rest of the week.

Today’s decline in the markets was triggered by the jobs report coming in better than expected. It may seem odd that good news hurts the market, but in this case, good news causes the large institutional traders to worry that strong job growth will convince the FOMC that the economy is too hot to lower interest rates anytime soon. Ever since the December meeting of the FOMC, the large traders have been convinced that rates would be declining as early as the first quarter of this year. However, one of the committee members offered the opinion earlier this week that rates might not decline until the fourth quarter of this year, if at all.



The implied volatility of the S&P index, as measured by VIX, didn’t rise very much this week, closing at 14.7%. A modest amount of protection is being purchased.

I continue to miss one significant characteristic of a strong bull market, i.e., increased trading volume. The S&P 500 index and NASDAQ Composite have been trading with volume generally below the 50 dma this year with only a few exceptions. Trading volume declined this week on both broad market indices.

The strongest sign of a continued bull market may be inferred from the Russell 2000 index, as measured by IWM. While SPX and NASDAQ took a haircut this week, IWM ended the week unchanged. On the other hand, IWM remains well below its all-time high from 2021. SPX and NASDAQ slipped below last week’s all-time highs today.

I am not ready to throw in the towel on the bull market yet, but we certainly took a warning shot across the bow today.

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Written by Dr. Duke

Created: 01 March 2024

The Standard and Poors 500 index (SPX) closed today at 5137, up 41 points or 0.8%. SPX opened the week at 5093, setting up a weekly gain of 0.8%. Today’s strong showing made up for earlier losses this week. Trading volume ran below the 50-day moving average (dma) all week with the exception of Thursday; I don’t know why it spiked then.

VIX, the volatility index for the S&P 500 options, closed today at 13.1%. VIX opened the week at 14.2% but steadily declined the rest of the week.

I track the Russell 2000 index with the IWM ETF, which closed today at 206, up two points on the day (+1.1%) and up three percent for the week. IWM broke the previous high for 2023 at 205 today, but it remains well below its all-time high of 237 from 2021.

The NASDAQ Composite index closed today at 16,275, up 183 points or 1.1%. NASDAQ opened the week at 16,014, for a weekly gain of 1.6%. NASDAQ remains shy of its all-time high from 2021, 16,212. NASDAQ’s trading volume ran at or slightly below the 50 dma all week with the exception of Thursday. What happened on Thursday?

I think the last two years in the market have conditioned me to expect the worst. Since this bull run began in November, I remained pessimistic, expecting a correction. But every time the market pulled back a bit, traders bought the dip and off we went. I tend to evaluate the market on the basis of the economic data, which have been mediocre at best. Every time I see a grocery bill or the cost of a meal at a familiar restaurant, the rate of inflation is impressive – and somehow is much higher than the 3% that is reported by the government.



With all of this bullish price action, one might expect implied volatility to be dropping, but the decline hasn’t been significant. VIX only lost one percentage point this week, closing today at 13.1%. Historically, that is higher than past bull markets. The large institutions may be a bit concerned, but the market steadily pulls ahead.



The Russell 2000 index, as measured by IWM, has been slow to jump on the bulls' wagon. IWM has also been much more volatile that the other broad market indices. IWM has gapped open either higher or lower nine times in February.

One bullish signal is missing in all of this bullish price action and that is higher trading volume. Both the S&P 500 index and NASDAQ have been trading with volume at or below the 50 dma this year with only a few exceptions.

The S&P 500 set a new all-time high today. I was watching the one-minute chart today, and SPX just motored higher all day. I kept expecting a last-minute sell-off as traders took profits, but it didn’t happen. That was a strong bullish signal, especially for a Friday afternoon.

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Written by Dr. Duke

Created: 16 February 2024

The Standard and Poors 500 index (SPX) closed today at 5006, down 24 points or 0.5%. SPX opened the week at 5027, setting up a weekly loss of 0.4%. Trading volume ran below the 50-day moving average (dma) most of the week; even when the CPI report disappointed the market on Tuesday and SPX took a tumble, trading volume didn’t spike higher. The bulls managed to push the S&P 500 stocks back to Monday’s levels by the end of trading on Thursday. That is an impressive recovery.

VIX, the volatility index for the S&P 500 options, opened the week at 13.5% and closed today at 14.2%. VIX nearly reached 18% on Tuesday but steadily declined the rest of the week to its close today at 14.2%.

I track the Russell 2000 index with the IWM ETF, which closed today at 202, down three points on the day (-1.4%) and up one percent for the week. IWM matched its December high at 205 on Thursday but pulled back a bit today. These are high beta stocks and you can see that with the extreme downward move on Tuesday and then an equally strong move over the next two days.

The NASDAQ Composite index closed today at 15,776, down 131 points or 0.8%. NASDAQ opened the week at 15,980, for a weekly loss of 1.3%. NASDAQ declined significantly on Tuesday and could not recover all of that loss this week. NASDAQ’s trading volume ran below the 50 dma all week with the exception of Thursday. Surprisingly, when the market dropped so far on Tuesday, NASDAQ’s trading volume barely reached the 50 dma.

The strength of this bullish run since early November is a sight to behold. The CPI report on Tuesday morning triggered a strong sell-off, but the immediate bullish response was remarkable. By today’s close, the market had nearly recovered all of Tuesday’s losses. The inconsistency of the strong recovery was average to below average trading volume on both the S&P 500 and the NASDAQ Composite.

VIX nearly hit 18% on Tuesday but it was short-lived. The institutions and large funds have gotten over their disappointment that a reduction in interest rates isn’t imminent.

The relative weakness of the Russell 2000 index continued through the end of January, but even Russell is on board with the bulls. Yesterday’s close in IWM was nearly at the high from 2024. This recovery is a strong endorsement of this bull market.

I find myself thinking that this market has gone too high too fast, but the trading in the Russell 2000 and the rapid recovery after Tuesday’s sell-off has convinced me of the bullish strength underlying this market. I am jumping on board and will make hay while the sun shines - but I am keeping a close lookout for rain clouds.