The Standard and Poors 500 index (SPX) closed yesterday at 4134, up four points on the day or +0.1%. SPX opened the week at 4137, essentially unchanged over the week. Note the long lower shadows on the candlesticks this week. The bulls are holding the market up but are not strong enough to push it higher. Trading volume continues to run below the 50-day moving average (dma).

VIX, the volatility index for the S&P 500 options, opened the week at 17.6%, and steadily declined to yesterday’s close at 16.8%. Implied volatility is also largely unchanged for the week.

The NASDAQ Composite index closed at 12,072 yesterday, up 13 points or +0.1%. NASDAQ opened the week at 12,108, down 0.3% for the week or effectively unchanged. The long lower shadow on yesterday’s candlestick shows the support of the bulls; they are holding back the bears but aren’t able or willing to drive it higher. NASDAQ’s trading volume continues to run below the 50 dma.

I track the Russell 2000 index with the IWM ETF, which closed yesterday at 177.6, up 0.2 points or +0.1% on the day. IWM opened the week at 177, so the Russell 2000 index is also trading sideways, in parallel with its big brothers, SPX and NASDAQ.

The fundamentals of this market remain unchanged. We continue to have high inflation, although the last CPI and PPI reports gave us some hope of moderation. On the other hand, the Fed’s pushing interest rates higher to fight inflation is stressing the banks holding large quantities of low interest treasury bonds. These forces appear to be roughly balanced at this point and I think the sideways trading in the market is evidence of that standoff. The S&P 500 index continues to trade between well-defined support around 4100 and the February highs around 4200. Traders are watching closely for signals of a breakout up through 4200 or a break down through 4100 or even 4050.

The SPX iron condors in my Flying With The Condor™ service are working very well in this market, up 35% in 2021, up 38% last year, and up 21% thus far this year. We have added a sister product, focused on smaller accounts, trading the S&P ETF, SPY. Our May and June positions stand at +18% and +12%, respectively. Contact me if you have any questions about this new service.

I remain cautious in this market. A small number of stocks are weathering the storm, but prices are very volatile. Being whipsawed in and out of positions is commonplace. Trade small and retain a large proportion of your trading capital in cash.