The Standard and Poors 500 index (SPX) closed today at 5124, down 34 points or -0.7%. SPX opened the week at 5131, setting up a weekly loss of 0.1%. Today’s loss appeared to start with this morning’s jobs report. Trading volume has declined all week and has been below the 50-day moving average (dma) for the last two days.

VIX, the volatility index for the S&P 500 options, closed today at 14.7%. VIX opened the week at 13.5% but rose steadily as the market softened and traders looked for protection.

I track the Russell 2000 index with the IWM ETF, which closed today at 207, down a tenth of a point on the day and unchanged for the week. IWM remains above the previous high from 2023 that it broke last week. But IWM remains below its all-time high of 237 from 2021.

The NASDAQ Composite index closed today at 16,085, down 188 points or -1.2%. NASDAQ opened the week at 16,264, for a weekly loss of -1.1%. NASDAQ’s trading volume followed the same pattern as SPX, hitting a high on Tuesday and declining the rest of the week.

Today’s decline in the markets was triggered by the jobs report coming in better than expected. It may seem odd that good news hurts the market, but in this case, good news causes the large institutional traders to worry that strong job growth will convince the FOMC that the economy is too hot to lower interest rates anytime soon. Ever since the December meeting of the FOMC, the large traders have been convinced that rates would be declining as early as the first quarter of this year. However, one of the committee members offered the opinion earlier this week that rates might not decline until the fourth quarter of this year, if at all.



The implied volatility of the S&P index, as measured by VIX, didn’t rise very much this week, closing at 14.7%. A modest amount of protection is being purchased.

I continue to miss one significant characteristic of a strong bull market, i.e., increased trading volume. The S&P 500 index and NASDAQ Composite have been trading with volume generally below the 50 dma this year with only a few exceptions. Trading volume declined this week on both broad market indices.

The strongest sign of a continued bull market may be inferred from the Russell 2000 index, as measured by IWM. While SPX and NASDAQ took a haircut this week, IWM ended the week unchanged. On the other hand, IWM remains well below its all-time high from 2021. SPX and NASDAQ slipped below last week’s all-time highs today.

I am not ready to throw in the towel on the bull market yet, but we certainly took a warning shot across the bow today.