The Standard and Poors 500 index (SPX) closed today at 5567, up 30 points or +0.5%. Today’s performance capped off a strong week at +1.8%. Trading volume ran below the 50-day moving average (dma) all week, with the exception of Monday.

VIX, the volatility index for the S&P 500 options, opened the week at 13.0% and declined the rest of the week to close today at 12.5%.

I track the Russell 2000 index with the IWM ETF, which closed today at 201, down one point or -1.5%. IWM opened the week at 204 for a weekly loss of 1.5%. IWM continues to trade a very choppy and non-directional pattern.

The NASDAQ Composite index closed today at 18,353, up 164 points 
or 0.9%. NASDAQ opened the week at 17,774 for a weekly gain of 3.3%. NASDAQ set new all-time highs for each of the past three days. Trading volume ran below the 50 dma all week with the exception of Monday’s spike.

The broad market indices have traded in a sideways channel since June 12th, but that changed markedly this week with nearly a 2% gain for the S&P 500 and the NASDAQ Composite was up over 3%. But the IWM chart, representing the small cap stocks of the Russell 2000, is downright ugly, trading without any direction.

This underscores the below average trading volume of the large blue-chip stocks. To have the strong gains we saw this week post with weak trading volume suggests that the large institutional players are largely on the sidelines.

When I read the articles from the market analysts, they all seem to be waiting for signals from the FOMC about coming interest rate reductions. Weak trading volume suggests the large institutions are far from being “all in”. When we see the Russell 2000 come to life, that will be the signal that the institutional traders are beginning to load up on some risk. Until then, we will continue to see the strong price volatility we have seen in June. No one wants to lose the gains of the past few months and they are nervous that the end is coming.

Be careful out there.