The Standard and Poors index (SPX) set several new all-time highs again this week, closing the week at 4698 for a weekly gain of 1.9%. I don’t believe I have ever seen the S&P 500 index move so far and so quickly. It worries me. Trading volume has reinforced this bullish run, starting at the 50-day moving average (dma) on Monday and then exceeding the 50 dma all week.

VIX, the volatility index for the S&P 500 options, closed today’s trading at 16.5%. VIX opened the week at 16.9% and steadily declined until Thursday when it posted a small gain to close at 15.4%. Today, it moved up a little over one point to close at 16.5%. We call these VIX divergences when both the VIX and the S&P 500 index rise in the same trading session. VIX divergences are rare and here we see two in succession. The market often pulls back after a VIX divergence. It is as though the big players see dangers on the horizon and start to buy protection even as the market continues higher.

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 moved up over 7%, it finally broke out of jail on 10/28 and has posted a strong run, setting several new all-time highs this week.

The NASDAQ Composite index is matching the performance of the S&P 500 index this week, setting a new all-time high every day and closing at 15972 today, up 2.8% for the week. NASDAQ’s trading volume ran above the 50 dma all week but declined to the average today.

When I look at the broad market indices, the S&P 500 index and the NASDAQ Composite, everything seems remarkably rosy. Even the Russell 2000 index has joined the “setting all-time highs” party. I have been concerned about this market for several weeks, simply because of marginal economic data that don’t support this booming market. The first VIX divergence posted yesterday when VIX and SPX both increased. Normally, these positive divergences, where the market is up, result in a market decline the next trading session. I think the extremely positive jobs report this morning set a very bullish tone, but that waned as the day wore on. Imagine my surprise this afternoon when I saw that we had posted another VIX divergence. I acted on that observation and closed several positions. I will relax a little more easily this weekend.