The Standard and Poors 500 index (SPX) closed today at 5006, down 24 points or 0.5%. SPX opened the week at 5027, setting up a weekly loss of 0.4%. Trading volume ran below the 50-day moving average (dma) most of the week; even when the CPI report disappointed the market on Tuesday and SPX took a tumble, trading volume didn’t spike higher. The bulls managed to push the S&P 500 stocks back to Monday’s levels by the end of trading on Thursday. That is an impressive recovery.

VIX, the volatility index for the S&P 500 options, opened the week at 13.5% and closed today at 14.2%. VIX nearly reached 18% on Tuesday but steadily declined the rest of the week to its close today at 14.2%.

I track the Russell 2000 index with the IWM ETF, which closed today at 202, down three points on the day (-1.4%) and up one percent for the week. IWM matched its December high at 205 on Thursday but pulled back a bit today. These are high beta stocks and you can see that with the extreme downward move on Tuesday and then an equally strong move over the next two days.

The NASDAQ Composite index closed today at 15,776, down 131 points or 0.8%. NASDAQ opened the week at 15,980, for a weekly loss of 1.3%. NASDAQ declined significantly on Tuesday and could not recover all of that loss this week. NASDAQ’s trading volume ran below the 50 dma all week with the exception of Thursday. Surprisingly, when the market dropped so far on Tuesday, NASDAQ’s trading volume barely reached the 50 dma.

The strength of this bullish run since early November is a sight to behold. The CPI report on Tuesday morning triggered a strong sell-off, but the immediate bullish response was remarkable. By today’s close, the market had nearly recovered all of Tuesday’s losses. The inconsistency of the strong recovery was average to below average trading volume on both the S&P 500 and the NASDAQ Composite.

VIX nearly hit 18% on Tuesday but it was short-lived. The institutions and large funds have gotten over their disappointment that a reduction in interest rates isn’t imminent.

The relative weakness of the Russell 2000 index continued through the end of January, but even Russell is on board with the bulls. Yesterday’s close in IWM was nearly at the high from 2024. This recovery is a strong endorsement of this bull market.

I find myself thinking that this market has gone too high too fast, but the trading in the Russell 2000 and the rapid recovery after Tuesday’s sell-off has convinced me of the bullish strength underlying this market. I am jumping on board and will make hay while the sun shines - but I am keeping a close lookout for rain clouds.