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The Standard and Poor’s 500 Index (SPX) closed today at 3847, up 73 points. It is surprising to note that today’s close was within one point of the opening Monday morning. This week has been chocked full of large moves both up and down, throwing fear into many traders, but we ended the week where we started. Trading volume spiked up above the 50-day moving average (dma) yesterday and remained above average today as well. The lows both yesterday and today were very close to the lows set in the pullback toward the end of January. In spite of all of the doom and gloom, this market seems to be finding support.

VIX, the volatility index for the S&P 500 options, closed today at 25%. After spiking as high as 32% yesterday, this was a dramatic reversal.

IWM, the ETF based on the Russell 2000 group of companies, closed at 217.71 today, down 2.6% for the week. The high this year for IWM was 215 in mid-January and that level has been tested several times over the past couple of weeks. The 50 dma was tested yesterday and IWM opened this morning and ran down through the 50 dma before turning and closing well above that level today. The Russell 2000 remains the only broad market index that has not broken its 50 dma this week.

The NASDAQ Composite index closed today’s trading at 12,920, up 197 points on the day but down 3.6% for the week. NASDAQ broke its 50 dma once last week and then recovered, only to break down through the 50 dma on Wednesday this week. Even after a dramatic reversal this afternoon, NASDAQ remains well below the 50 dma at 13,341. NASDAQ’s trading volume remained below average all week, except for a spurt higher on Thursday.

This was an interesting week in the markets with three very bearish trading days and two gap openings lower Wednesday and Thursday. With the exception of the Russell 2000, the other broad market indices all broke their 50 day moving averages this week. Yesterday’s performance caught my attention and caused me to start playing defense and being reticent to add new positions.

But what a difference a day makes. SPX opened roughly at the intraday high from yesterday, tested yesterday’s lows and then proceeded to trade higher and soundly recover the 50 dma. The S&P 500, NASDAQ and the Russell 2000 all staged strong intraday recoveries today, but NASDAQ’s was the most dramatic. It closed a few points higher than this morning’s open after falling almost 500 points from the open, even setting a lower low than yesterday’s intraday low. You don’t see that very often.

Well, that is all very interesting, but where does it leave us? After the dust settled today, we have two indicators that appear surprisingly positive. One is the strong intraday recoveries staged by the S&P 500, NASDAQ and the Russell 2000. A stronger bullish signal came from the Russell 2000 index. This index is comprised of small to mid-capitalization stocks. These are the classic high beta stocks that tend to outperform the S&P 500 whether it is moving higher or lower. They are the stocks sold first in a panic. But that didn’t happen this week.

Since the first of this year, the S&P 500 is up 2%, the NASDAQ Composite is down 0.3%, and the Russell 2000 is up 10%. Yes, I checked my numbers. The Russell 2000 has gained a little over 10% for 2021 year to date.

By contrast, what we saw in the March correction last year was more typical: the S&P 500 lost 35%, the NASDAQ Composite lost 27%, and the Russell 2000 was the winner of the race downward at 43%. These are the classic stocks bought when traders yell “risk on” and sold when the tide turns. Why are they holding up so well this year?

I will remain cautious as trading opens Monday, but I don’t feel nearly as anxious as I did at yesterday’s close.