The Standard and Poors 500 index (SPX) closed down at 4399, down 13 points or 0.3%. Monday’s open at 4450 set up a down week of -1.1%. Yesterday’s market took a tumble, but the long lower shadow on the candlestick was encouraging. However, today’s candlestick was the classic shooting star, commonly presaging a downturn. Trading volume was well below the 50-day moving average (dma) on Monday, but it didn’t fare much better all week.

VIX, the volatility index for the S&P 500 options, opened the week at 13.9% and generally rose all week, closing today at 14.8%. VIX spiked just over 17% on Thursday’s market drop, but recovered to close the day at 15.4%.

I track the Russell 2000 index with the IWM ETF and IWM had a disappointing week, closing at 184.7, up two points or +1% today, but down 1.2% for the week. IWM almost gave up all of its gains from last week. We expect the small cap stocks of the Russell 2000 to lead both bull and bear markets, but they seem to only lead the downturns of late. IWM remains well below its February highs.

The NASDAQ Composite index closed at 13,661 today, down 18 points or -0.1% on the day and down 1.0% for the week. Today’s candlestick on NASDAQ was the shooting star we noted on SPX, a bearish sign for next week. NASDAQ’s trading volume ran above average all week with the single exception of the half day of trading on Monday.

Last week, the market ignored Powell’s clear message to Congress that the Fed isn’t through raising the discount rate. That set up a solid market run that almost reached the mid-June highs. The FOMC minutes on Thursday confirmed Powell’s sentiment that the inflation rate remains too high and more rate hikes will be required. That appeared to surprise the market and it took a tumble. Today’s trading recovered some of yesterday’s losses, but the pattern of the intraday trading looks rather bearish (the shooting star candlestick). I am concerned what Monday will bring.

Trading volume on the S&P 500 stocks remains below average and that is, at best, an unenthusiastic bullish signal. I think it shows a lack of conviction by the bulls.

I am picking at some trading opportunities, but I remain cautious. Whenever there is a doubt, I close the trade and preserve my cash.