After dropping over one percent yesterday, the Standard and Poors 500 index (SPX) traded up today, closing at 4582, up 45 points or +1% on the day, but posted a weekly gain of 0.9%. Trading volume ran under the 50-day moving average (dma) all week, except for Thursday’s down session.

VIX, the volatility index for the S&P 500 options, spiked above 15% during yesterday’s bear market, opened today at 14.0%, and moved down to 13.3% at the close of trading today.

I track the Russell 2000 index with the IWM ETF. IWM traded down with the rest of the market yesterday but closed up 2.5 points at 196.4 today. IWM opened the week at 194.6 for a 0.9% weekly gain.

Similar to the S&P 500 index, the NASDAQ Composite index fell out of bed yesterday, but recovered today, closing at 14,317, up 1.9% on the day and up 1.7% for the week.

The FOMC meeting was the center of attention this week, raising the federal discount rate by 25 basis points to a current rate of 5.25% to 5.50%. The markets didn’t respond much in either direction after the announcement on Wednesday. After sleeping on the news, traders woke up in a very negative mood on Thursday and the markets declined significantly.

The prevailing talking heads claimed the markets realized that inflation pressures were coming down after the Personal Consumption Expenditures report came out this morning, so the market recovered yesterday’s losses. I find these pat answers a little simplistic. Those rising interest rates will increase the pressure on stressed banks and will continue to slow economic growth. The latest estimate of GDP growth for the second quarter is a positive 2.4%. But I expect the third quarter numbers will show the results of that continuing pressure.

I entered some bullish trades today, but I remain cautious longer term. I see too many negatives in our economy to be bullish.