The Standard and Poors 500 index (SPX) closed today at 5305, up 37 points or +0.7%. SPX was unchanged for the week. SPX set a new all-time high on Tuesday, but the index lost all of that and more on Thursday. Trading volume continues to run well below the 50 day moving average (dma).

VIX, the volatility index for the S&P 500 options, opened the week at 12.3%, spiked as high as 13.4 on Thursday, but closed today at 11.9%. Even Thursday’s spike on the VIX was less than I would have expected for that sudden sell-off.

I track the Russell 2000 index with the IWM ETF, which closed today at 205, up 2.2 points or 1.1%. IWM opened the week at 208 for a weekly loss of 1.4%. IWM really took it on the chin on Thursday, almost reaching its 50 dma. Even today’s bullish move higher barely recovered half of yesterday’s loss. The Russell 2000 isn’t leading the bulls.

The NASDAQ Composite index closed today at 16,921, up 185 points or +1.1%. NASDAQ opened the week at 16,702 for a weekly gain of 1.3 percent. Trading volume ran above the 50 dma all week, in contrast to the S&P 500 index.

The current market appears to be largely driven by comments from Powell or one of the other members of the FOMC. Toward the end of 2023, many Wall Street analysts convinced themselves that the Fed would be reducing interest rates this year, starting in the first quarter. All of the large and sudden moves in the broad market indices this year have been driven by comments or rumors that rate reductions were not imminent. The scare this week came from comments of one of the FOMC members that a rate increase might be in order if inflation isn’t curtailed soon. The street sees rate reductions as a return to easy money, economic expansion and a strong stock market. That promise is always appealing.

May has been a strong month in spite of Thursday’s temper tantrum. But this market remains very volatile and twitchy. It doesn’t take much to tip it one way or the other. Neutral to bullish trades are still working but keep the stops close.