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The Standard and Poors 500 index (SPX) closed yesterday at 4204, down 55 points or 1.3%. SPX opened the week at 4327 and ended the week down by 2.8%. Trading began very weakly on Monday and declined 3.6% by the close on Tuesday. Trading the balance of the week kept SPX largely on a sideways track. Trading volume of the S&P 500 companies spiked early in the week but declined the rest of the week, moving below the 50-day moving average (dma) Thursday and Friday.

VIX is the volatility index for the S&P 500 options, and it declined steadily this week, opening Monday at 35.9% and closing yesterday at 30.8%. Volatility remains elevated; don’t let your guard down.

The NASDAQ Composite index followed all of the broad market indices yesterday and closed down 2.2% at 12844. NASDAQ opened the week at 13328, so NASDAQ remains the weakest index this week with a decline of 3.6%. NASDAQ trading volume ran above the 50 dma all week.

The broad market indices traded largely down and then sideways this week. On 2/24, the S&P 500 index traded down to 4115 before recovering a bit to close at 4156. This is the latest area of support during this correction. Tuesday’s low this week at 4158 bounced off that support level and yesterday’s close was well above those levels.

Thus far, the news from Ukraine has not done any more damage to the stock market. I believe the bullish foundation that seems to support this market is largely due to the relaxing of the Covid restrictions and the expected strengthening of  the economy. The primary hobgoblins worrying the market are record-setting levels of inflation coupled with the Fed’s expected increase of the discount rate next week. A quarter point rate increase is probably priced into this market, but a half point increase might push traders to sell.

The broad market indices are largely trading sideways as the FOMC meeting approaches, albeit a very choppy sideways movement.

I have had good results with small positions in oil and gold stocks, e.g., the GLD spread I sent to newsletter subscribers on 2/22. But I remain largely in cash and will wait on the FOMC announcement and the market’s reaction before changing that position.