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The Standard and Poors 500 index (SPX) barely held onto a sideways trend last week, closing Friday at 4145, down 6.75 points. The week opened at 4112, so we maintained a positive return for the week at +0.8%. The S&P 500’s trading volume remained below the 50 day moving average (dma) all week.

VIX, the volatility index for the S&P 500 options, opened the week at 22% and closed Friday at 22.4%. Volatility continues to decline, but I remain on alert.

I track the Russell 2000 index with the IWM ETF. IWM closed at 190.80 Friday, up 1.45 points or 0.8% on the day and up 3% for the week. Friday’s gain broke through the resistance level set by the June recovery high at 190.

The NASDAQ Composite index closed Friday at 12,658, down 53 points or -0.5%, but remained up almost 3% for the week. NASDAQ broke through its failed June recovery high on 7/29 and confirmed that over the last three days of last week. NASDAQ’s trading volume climbed Wednesday and Thursday, but dropped below the 50 dma on Friday.

The post-FOMC bullish trend continued last week, in part fueled by a strong jobs report on Friday. NASDAQ broke through the highs of the failed June recovery on 7/29 and was joined by the Russell 2000 on Friday. However, that resistance level is still holding for the S&P 500 index and the Dow Jones Industrial Average.
The administration continues to try to tell us we are not in a recession, but the facts are clear. Two subsequent negative growth rates in GDP have always been considered the basic definition of a recession. I see no signs of inflation abating anytime soon. The CPI numbers will be reported on Wednesday. That report will be critical to a continuation of this market’s bullish trend.

I am carefully picking a few trades that take advantage of the bullish trend, but I remain cautious and will close or hedge several positions in advance of the CPI report on Wednesday morning.