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It would be hard to find a stronger week for the market than the one we just completed. The Standard and Poors index (SPX) opened the week at 4173 and closed today at 4281, up 2.6% for the week. Wednesday was the only day of rest. Trading on Thursday and Friday set new all-time highs for SPX. However, this week’s steady march higher occurred on below average trading volume. Today’s trading of 2.6 billion shares was the lone outlier this week to exceed the 50-day moving average (dma) at 2.2 billion shares.

VIX, the volatility index for the S&P 500 options, opened the week at 21.7%, reflecting the lingering effects of last Friday’s severe decline. VIX declined four points in a single day on Monday and continued to soften the balance of the week, closing today at 15.6%. The low close for VIX this year occurred last week at 15.7% before the market melted down after the Fed meeting. Today’s close edged that out for this year’s lowest reading in volatility.

The IWM ETF, based upon the Russell 2000 index, took the record among broad market indices this week, posting gains each day, including two gap openings higher Thursday and Friday. IWM closed today at 232.28, up 3.7% for the week. I watch the Russell 2000 carefully because these are the high beta stocks that lead bull markets higher and also lead bear markets lower. This was the strongest bullish signal I observed this week.

The NASDAQ Composite index also posted a strong bullish week, closing at 14360, up 2.2% for the week. NASDAQ set three all-time highs this week and gapped open higher twice before taking a breather today and pulling back nine points. This week’s trading culminates a steady recovery since early May for this index, which suffered significant losses earlier this year.

This market continues to whipsaw traders in and out of the market. Last week, the Fed meeting spooked traders, although they apparently were imagining a monster in the closet. The bulls staged a coup over the weekend and the future is rosy again. I am being sarcastic; this week’s run was a remarkable turnaround that is difficult to explain rationally.

I have never seen the IBD's market assessment change signals so often. Last Friday, IBD shifted their assessment from Confirmed Uptrend to Uptrend Under Pressure after the market closed. They reversed themselves once again on Tuesday, returning to Confirmed Uptrend. That makes seven reversals this year. We aren’t alone in our being whipsawed in and out of this market.

I remain very cautious. I doubt the prospect of a severe correction, but this market is schizophrenic. I started the week 92% in cash and ended the week at 60%. I am cautiously returning to the table.