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The Standard and Poors index (SPX) appeared to bounce off support around 4389 on Thursday and closed Friday at 4442, up 36 points or 0.8%. SPX opened Monday at 4462, so it recovered much of the week’s losses and ended the week down 0.4%. Trading volume spiked above the 50-day moving average (dma) on Thursday but remained below average the rest of the week.

VIX, the volatility index for the S&P 500 options, opened the week at 17.1%, spiked up to an intraday high of 24.7% on Thursday and closed Friday at 18.6%. It appears the mini-correction is over, but I will be watching very carefully on Monday.

I plot the prices of the IWM ETF to track the Russell 2000 index. The owners of Russell have priced everyone out of Russell 2000 index and option data. That is why I plot the IWM prices. IWM has been extremely choppy for the past six months and declined severely in mid-July. IWM almost matched those July lows on Thursday while breaking down through the 200 dma. IWM bounced upward strongly on Friday, closing at 215.52, up 3.58 points or +1.7%. Even with Friday’s strong close, IWM lost 1.9% this past week. The Russell 2000 would have to gain 3.5% to regain its 50 dma.

The NASDAQ Composite index broke down through its 50 dma on Wednesday and didn’t recover that benchmark until Friday when it closed up 173 points at 14715. This resulted in a decline of 0.4% for the week. NASDAQ’s trading volume has consistently run under the 50 dma since July 20th.

The overall market trends of the S&P 500 and NASDAQ have tracked higher this year, but it has been a rough ride with frequent and sudden pullbacks. We are caught between bullish expectations for the economy’s recovery and the fear of inflation. The Russell 2000 chart is downright ugly. It is difficult to see the overall market continuing higher without the leadership of the small to mid-cap stocks. I continue to trade cautiously. I started the week 58% in cash and ended the week at 70% cash. This shift is primarily the result of my closing out this month’s Conservative Income positions. I was unwilling to roll them out to next week. I preferred the safety of cash for the weekend.