After setting a new high for this year on Wednesday, the Standard and Poors 500 index (SPX) paused yesterday and today, closing today at 4536, essentially unchanged on the day, but still posted a weekly gain of 0.6%. Trading volume exceeded the 50-day moving average (dma) starting Tuesday and spiked higher today, although I am unsure why – maybe taking profits?

VIX, the volatility index for the S&P 500 options, opened the week at 13.8% and was largely unchanged all week, closing today at 13.6%. This moderately high level of volatility may hint at continued put demand for hedging.

I track the Russell 2000 index with the IWM ETF. IWM traded down the past two days, closing down 0.6 points at 194.5 today, but IWM maintained a positive week’s gain at +1.7%. IWM touched its high for the year on Wednesday but could not hold it, trading lower the balance of the week.

Similar to the S&P 500 index, the NASDAQ Composite index set its high for the year on Wednesday, but then traded off sufficiently to turn in a weekly loss of 0.8%. NASDAQ’s trading volume ran at or above average all week.

In light of continuing inflation, increasing interest rates, and fear of more bank failures, this week’s trading was rather calm. With the current positive numbers in employment and housing, it is hard to be bearish. But high rates of inflation and rising interest rates are taking their toll. Here in the Western suburbs of Chicago, we have a large number of empty storefronts. The national debt continues to grow, and rising interest rates are raising the servicing costs for that debt.

Consumers are being squeezed in a similar manner. The interest rate on the 
TJ Maxx credit card recently rose to 32%, close to loan shark territory. Presumably, people learned the lesson to avoid adjustable-rate mortgages back in 2008, but for anyone holding much personal unsecured debt, the pressure is building.

The broad market averages remain moderately bullish, but I don’t see much enthusiasm with traders. My clients are pulling in their horns.

I booked some quick gains playing the earnings announcements of NFLX and TSLA this week. Normally I would consider those trades rather risky. In this market environment, being in a quick “in and out” trade somehow doesn’t seem so bad.

I remain cautious.