The Standard and Poors 500 index (SPX) closed today at 4109, up 58 points on the day or +1.4%. SPX opened the week at 3983 for a weekly gain of 3.2%. SPX is up 6.6% year to date. Today’s close broke the failed December rally highs at 4100, but I would like to see that confirmed next week. I have been fooled too many times over the last 18 months. Trading volume ran below the 50-day moving average (dma) this week. That isn’t a solid endorsement of the rally.

VIX, the volatility index for the S&P 500 options, opened the week at 22.1%, and steadily declined to today’s close at 18.7%. closed today at 21.7%, up 0.9 points or +4%. Some analysts view a low level of volatility to be bearish and it is true we have recently hit levels around 18% and that was followed by another spike higher. Historically, levels around 18% are not really low.
 
I track the Russell 2000 index with the IWM ETF, which closed today at 178.4, up 3.2 points or 1.8% on the day and up 2.6% for the week. IWM remains below both its 200 dma and its 50 dma. The Russell 2000 index posted a strong performance this week but remains comparatively weak.

The NASDAQ Composite index closed at 12,222 today, gaining 208 points or +1.7%. NASDAQ opened the week at 11,869 leading to a 3% gain for the week. NASDAQ has now broken out above above both its 50 dma and 200 dma and is threatening its February high. On the other hand, NASDAQ’s trading volume is not very encouraging, running well below average all week.

This week’s economic data are mediocre at best, although the trends are sideways to slightly higher. A key piece of data was today’s PCE price index, up 0.3% for February, down from January’s +0.6%, but the year over year figure remains at 5.0%, down slightly from 5.3% last month. The FOMC focuses on the PCE data, so this may encourage a continuation of the discount rate hikes this year. The FOMC’s primary tool to bring down the inflation rates is to continue to raise interest rates. However, higher rates are stressing the banking system. March has turned out to be reasonably strong, but the market remains volatile and may twitch lower on any bad news.

I have been entering a small number of trades but remain cautious. I closed several trades earlier this week that would have been profitable if I had held them through today. I posed the question above: Is the Bear Market Over? I have the scars from last year and it isn’t clear to me that this market has turned higher. IBD has changed their market assessment to Confirmed Uptrend, but I will need additional confirmation before committing additional cash to this market.