The markets incurred another mini-correction of 5.2%, roughly over the month of September. This one was a bit more severe and longer lived than the earlier ones this year. The Standard and Poors index (SPX) closed Friday at 4471, up 33 points or 0.8% on the day. SPX had a very strong week, gaining 2%, recovering its 50 day moving average (dma), and gapping open higher on Thursday and Friday. We are a long ways from the last high set on 9/2, but it appears that the bulls are once again in control. Trading volume for the S&P 500 companies remained below the 50 dma all week but managed to move slightly above the average on Friday.

VIX, the volatility index for the S&P 500 options, opened the week at 20% and closed Friday at 16.3%. Historically, this level of volatility remains moderately high, although this has been the norm for 2021. Traders remain cautious.

I track the Russell 2000 index with the IWM ETF. The owners of Russell have priced everyone out of the Russell 2000 index and option data. That is why I plot the IWM prices. IWM has been extremely choppy for the past six months but followed the broad market higher this week and closed Friday at 225.16. However, that was a decline for the day when the S&P 500 motored strongly higher. On the other hand, IWM posted a 2.9% gain for the week, the best of the broad market indices. IWM has now recovered both its 50 and 200 day-moving-averages, but it is certainly not leading this bull market. That isn’t a good sign.

The NASDAQ Composite index wins the prize for the week with a 2.5% gain. NASDAQ closed Friday at 14,897, up 74 points or 0.5%. NASDAQ just managed to recover its 50 dma on Friday, so this index is still a bit wobbly. NASDAQ’s trading volume climbed steadily all week and finally recovered its 50 dma on Friday.

The choppiness of this market this year has worn me out. It seems like the market twitches every few weeks, tripping my stops and handing me a small loss. This is getting old. The increasing probability of an inflationary spike has the market on edge and this week’s CPI data exacerbated those fears.  Powell continues his attempts to calm the markets and write off the current price increases as an artifact of the disrupted supply chain. But the minutes from the last FOMC meeting came out this week and revealed that several members are beginning to question whether this inflation spike is really transient.

My conclusions for this week are relatively unchanged. The whipsawing of the markets over the last nine months is wearing me down. The decline of the Russell 2000 index Friday is a significant concern. This is not a healthy bull market and I remain very cautious.