The Standard and Poors 500 index (SPX) set a new low for 2022 yesterday at 3492, down 27% on the year. SPX opened higher this morning at 3690, but could not hold the gains, closing down 87 points at 3583, down 2.4% on the day and down 1.8% for the week. Trading volume spiked to 3.2 billion shares yesterday and remained above the 50-day moving average (dma) today with 2.6 billion shares.

VIX, the volatility index for the S&P 500 options, closed down today at 32% after spiking as high as 35% earlier this week. This level of volatility remains a concern. It seems like we have been saying this all year, but this is a nervous market.

I track the Russell 2000 index with the IWM ETF. IWM did not set a new low for the year on Thursday, which I regard as bullish since the small cap stocks usually lead markets lower in bear markets. IWM closed today at 166.81, down 4.6 points or -2.7% on the day and down 1.5% for the week.

The NASDAQ Composite index set a new low for the year on Thursday at 10,089, down 36%. NASDAQ closed today at 10,321, down 328 points or 3.1% on the day and down 3.2% for the week. NASDAQ’s trading volume spiked above the 50 dma on Thursday but remained below average the rest of the week.

On Monday, October 3rd, it appeared that the market had found support at the June lows. SPX gapped open the next day and set up a series of sideways trading days. Then SPX gapped downward last Friday and proceeded to break the June lows. The market opened much lower this past Thursday but immediately started a strong run higher, led by the financial stocks.
 
Thursday was a strong day for the markets, but Thursday’s opening set a new market low for 2022. The S&P 500 index touched down at -27%, and NASDAQ recorded a low of -36%. The Russell 2000 index, measured via IWM, did not quite reach its June low at -28%. Normally, the high beta stocks of the Russell 2000 would be leading the race to the bottom, but not this time. That is the only positive sign I can find in this market.
 
The only new trades I entered this week for the trading group were earnings plays on WBA (+16%), JPM (+17%), and UNH (+28%). Overnight earnings trades incur more risk, but they don’t require the trader to have a conviction for overall market direction. That market assessment has proven difficult to impossible this year.
 
I closed the October SPX iron condor for the Flying With The Condor™ subscribers for a gain of 23%. That service is up 27% for 2022, compared to the S&P 500 at -23%. This has been an excellent year for non-directional trading. These positions are far enough out of the money to withstand the price volatility typical of this year’s market.

My recommendation is to stay in cash until we witness a clear bounce from the June lows with follow through.