The Standard and Poors 500 index (SPX) initially traded higher yesterday, but then retreated, closing down 37 points at 3962 for an decline of nearly one percent. But the week remained positive, trading up 2% from the week’s open at 3884. The S&P 500’s trading volume remained below the 50-day moving average (dma) all week. Lower than average trading volume remains a negative factor for this market.

VIX, the volatility index for the S&P 500 options, closed down yesterday at 23%, down over 7% for the week. Volatility seems to be on a see saw, remaining in the mid-twenties plus or minus a couple of points week after week. To my mind, that connotes nervous institutions.

I track the Russell 2000 index with the IWM ETF. IWM declined yesterday, closing at 179.51, a decrease of nearly two percent. But IWM remained up by 2.5% for the week. IWM finally recovered its 50 dma this week.

The NASDAQ Composite index followed the lead of the other broad market indices yesterday, closing down 226 points at 11,835, nearly two percent lower. NASDAQ finally recovered its 50 dma this week. NASDAQ’s trading volume remains below its 50 dma.

The markets have recovered much of the previous losses and have finally recovered the 50 day moving averages, but we are far from where we started the year. Traders are worried about the effects of increasing inflation on the economy on the one hand and equally worried about the Fed raising interest too far and too fast and possibly pushing the economy into recession.
I remain largely in cash; my only longer term trades are the SPX condors of the Flying With The Condor™ service, up 25% this year. The calendar spread we opened on AAPL to play the implied volatility rise in advance of its earning announcement worked out very nicely.

I remain cautious. Don’t expose too much capital to this market.