The Standard and Poors 500 index (SPX) closed yesterday at 4072, down less than five points on the day but up 1.7% for the week. With the exception of the trading volume spike on Wednesday, volume has run well below the 50-day moving average (dma) at 2.6 billion shares. The week closed with 2.1 billion shares traded.
VIX, the volatility index for the S&P 500 options, opened the week at 22.1% and declined all week to today’s close at 19.1%. VIX opened 2022 at 17.6% and hit highs over 35% several times. Friday’s close was slightly lower than the previous low in August but above the April low of 18.5%.
I track the Russell 2000 index with the IWM ETF. IWM closed Friday at 188.05, up 1.09 on the day, and up 2.1% for the week. IWM has held up with three closes above its 200 dma but is encountering resistance around 189 from highs set in September and mid-November.
The NASDAQ Composite index closed at 11,462 yesterday with a loss of 21 points or 0.2% but closed the week up 2.8%. NASDAQ’s trading volume spiked on the large gain on Wednesday but declined the rest of the week, closing below the 50 dma.
The period from Thanksgiving into the first of the year has historically been bullish and small caps have historically outperformed the blue chips over this period of time. Although trading was technically up this week, the market was very choppy. The S&P 500 index has managed to hold above the 200 dma, but we are off to a weak start for the Santa Claus Rally.
Trading volume remains well below average, suggesting that the large institutions and hedge funds are waiting on the sidelines for a clear direction to solidify.
SPX hit its low for the year on October 13th with a decline of 27% from the year’s opening. The market has risen 17% from that low to yesterday’s close. But this rise has been erratic and choppy. It doesn’t instill confidence. I remain largely in cash, but I am entering a small number of trades when I see opportunities. However, I am taking profits and closing out losses quickly.