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It is hard to overstate the strength of the market this week. The Standard and Poor’s 500 Index (SPX) essentially recovered the losses of the past three weeks in five trading sessions this week. SPX opened the week at 3,296 and closed yesterday at 3,509, up 6.5% in one week! That included three trading session opens with large opening gaps higher. Even Friday’s pause in this week’s strong run had a positive aspect in that traders took the market lower, but that slight pause was seen as a bargain as traders pushed the market higher to close very close to Friday’s open. SPX trading volume spiked on Tuesday but trading volume then declined and closed the week well below average.

As one might have expected, the volatility index for the S&P 500 options, VIX, made a dramatic decline this week as SPX headed higher. VIX opened the week at 38.6% and closed yesterday at 24.5%, roughly at the base level of the past couple of months.

IWM, the ETF based on the Russell 2000 group of companies, ran higher this week, largely in parallel with the broad market indices. IWM opened the week at 154.77 and closed Friday at 163.62, up 5.7%. Although IWM’s increase this week was less than that of the S&P 500, it is worth noting that IWM didn’t decline as far in October as the broad market indices.

The NASDAQ Composite index was the star in this bullish market run this week, closing at 11,895 Friday, up 8.0% for the week. The high-tech stocks that were the center of the bullish run earlier this year have returned to center stage. Unlike the S&P 500, NASDAQ trading volume gained steadily this week.

All of the broad market indices made a strong recovery this week. Everyone has their own explanation, but I think the assessment to which I personally subscribe is that the market is reacting very positively to the prospects of a split election result with neither political party dominating. Many may feel that this election result is less than optimal, but markets prefer minimized economic and political changes simply because that minimizes the prospect of unintended consequences, resulting in reduced risk.

Another indicator of the rapid price swings of this market is seen in IBD’s market assessment that has moved from Confirmed Uptrend to Market In Correction, and then back to Confirmed Uptrend in only 33 trading sessions or about six weeks. I have not done the research, but I suspect this may be a record round trip.

I would caution readers about returning to the market too aggressively. This is especially true in two cases. If your risk profile is more conservative, then caution remains the rule. Even if you are willing to take on more risk, a significant criterion is whether you are able to monitor your positions closely throughout the day. This market moves quickly.

I have personally started investing more capital into the market this week, steadily increasing each day as the market continued higher. But the need for caution remains.