The Standard and Poors index (SPX) gapped open and headed higher this morning, closing the day's trading at 4230, up 37 points or 0.9% for the day. SPX opened Tuesday morning at 4217, so the index barely made it back to its starting point, up 0.3% for the week. It shows the volatility of this market when we see a gap opening lower on Wednesday and then a gap opening higher just two days later. Trading volume remained under the 50-day moving average (dma) all week.

VIX, the volatility index for the S&P 500 options, declined strongly today, closing at 16.4%. This was the lowest close for VIX since April 16th. Will it hold or will traders find something new to worry about next week?

The IWM ETF, based upon the Russell 2000 index, rose only modestly today, closing at 227.40, up 0.98 or 0.4%. IWM opened the week at 227.46, so this index was essentially unchanged for the week. That observation takes some of the optimism out of today’s strong bullish move on the blue-chip stocks. If the large institutional firms were truly shifting to “risk on”, we should see these high beta stocks picking up steam.

The NASDAQ Composite index closed today at 13814, up 200 points or 1.5%. However, NASDAQ gapped open lower on Wednesday and then gapped open higher today, leaving the index essentially flat for the week, since opening Tuesday at 13829. NASDAQ’s trading volume came to life this week, moving above the 50 dma on Wednesday and Thursday. It is interesting to see today’s strong bullish move was not even quite up to the 50 dma.

Today’s strong market finally pushed the IBD market assessment back to Confirmed Uptrend. Let’s review the recent history:


•    May 4th: Confirmed Uptrend to Uptrend Under Pressure
•    May 7th: Uptrend Under Pressure to Uptrend Resumes
•    May 10th: Uptrend Resumes to Confirmed Uptrend
•    May 12th: Confirmed Uptrend to Uptrend Under Pressure
•    June 4th: Uptrend Under Pressure to Confirmed Uptrend

The fact that IBD’s rather conservative measure has been whipsawed back and forth over the past month is telling. It isn’t just you. This has been an extremely volatile market that has challenged even the most experienced analysts.

It is easy to focus on today’s positive market action and perhaps even become euphoric. After all, the market has worn us down.

Review this week’s performances for each of the broad market indices:


•    The S&P 500 was up 0.3%.
•    The Russell 2000 was down 0.03%.
•    The NASDAQ Composite was down 0.1%.

I hope today was indeed the sea change we want to see. But it pays to be somewhat circumspect. Caution and trading discipline still rule the day.