The Standard and Poors 500 index (SPX) closed today at 4463, up 51 points or 1.2%. SPX opened the week at 4203 and ended the week with an impressive 6.2% increase. Trading began to strengthen on Tuesday and took off the rest of the week. Trading volume was below average most of the week but spiked strongly higher today. Usually, I would interpret that volume spike as an endorsement of the market’s move higher, but today is quadruple witching which always causes a large volume spike as four major derivatives are settled each quarter.
 
VIX, the volatility index for the S&P 500 options, declined steadily this week, opening Monday at 31.0% and closing today at 22.9%. That is a large decline. Is the market recovery really here?

The NASDAQ Composite index also turned in a positive week of trading with an 8.6% gain, outperforming all of the broad market indices. NASDAQ closed today at 13893 with a gain of 279 points. Of course, NASDAQ took significant losses in this correction, so one would expect it to run faster when the skies cleared. NASDAQ trading volume ran above the 50 dma all week and spiked higher on quadruple witching today.

Jerome Powell and the FOMC said all of the right things this week and really encouraged the market. It isn’t common to see four days of advances like we saw this week. Now the question becomes whether we continue to see strong advances or perhaps we will see the classic stair step advance with occasional “breathers” starting next week.

I am beginning to put additional capital to work in this market, but I am proceeding cautiously.