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The Standard and Poors index (SPX) set a new all-time high on Thursday at 4550 and then traded sideways today, closing at 4544, down almost five points on the day. SPX had a strong week, gaining 81 points or 1.8%. The lowest close in this most recent pull back was 4300 on October 4th. That computes to a 5.7% gain in fourteen trading sessions. It may be significant that this strong rise of the market this month has occurred with trading volume for the S&P 500 companies remained largely below the 50 day moving average (dma).

VIX, the volatility index for the S&P 500 options, opened the week at 17.3% and closed Friday at 15.4%. Although volatility declined this week, this level of volatility remains moderately high. Traders remain cautious.

I track the Russell 2000 index with the IWM ETF. The owners of Russell have priced everyone out of the 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 that trading pattern continues. While the S&P 500 has been trading strongly higher since October 4th, up almost six percent, and set a new all-time high yesterday, IWM remains almost one percent below its recent high on September 2nd. The market’s high beta stocks are not leading this charge.

The NASDAQ Composite index managed a weekly gain of 1.7%, but the chart tells a different story. Today’s close at 15,090, down 126 points, took NASDAQ nearly back to Tuesday’s open. Monday’s strong gain was essentially the week’s gain. NASDAQ remains 284 points or 1.9% below its recent all-time high of 15,374 on September 7th. NASDAQ’s trading volume did manage to spike up above the 50 dma yesterday and today, although today was a down day, so that wasn’t reassuring.

I have been reeling from this market’s choppiness this year. It seems like the market twitches every few weeks, trips my stops and hands me a small loss. As I watched the stellar rise of the S&P 500 this week, it caused me to wonder about the long term trend and whether this market makes sense. Is this overall market trend consistent with the growth of the U.S. economy? Both the Producer Price Index and the Consumer Price Index are setting new records. On a recent driving vacation my wife and I took south, we frequently would stop at a fast food restaurant to take a break and get a snack and coffee. The dining room was usually closed because they only had enough staff to serve the drive through window. Even the Fed’s Beige Book mentioned staffing shortages as a common problem for businesses. And many businesses didn’t survive the economic shutdown. One fast food restaurant near our house is offering a hiring bonus of $500. The Fed is printing money every month and Congress is setting spending records. When interest rates finally start to rise, the bill to service our national debt will quickly become a significant burden. Remember Greece a few years ago?

Perhaps this explains the twitchy market this year. And it may explain why both the Russell 2000 and NASDAQ are not following the S&P 500 and setting new highs. My conclusions for this week are relatively unchanged. I am setting tight stops and taking profits early. This is not a healthy bull market and I remain very cautious.