The Standard and Poors 500 index (SPX) closed today at 5,626, up 30 points or +0.5%. SPX opened the week at 5,442, gaining 3.4% for the week, about the same magnitude as its loss last week. Trading volume declined over the last three trading sessions this week.

VIX, the volatility index for the S&P 500 options, steadily declined this week, opening the week at 21.3% and closing today at 16.6%. I would normally consider this to be moderately high volatility but after the August correction, this feels low.

I track the Russell 2000 index with the IWM ETF, which closed today at 217, up five points or +2.5%. IWM gapped open higher twice this week, posting a gain of 4.3%.

The NASDAQ Composite index closed today at 17,684, up 114 points or 
+0.7%. NASDAQ opened the week at 16,836, setting up a strong weekly gain of 5%. NASDAQ’s trading volume remained at or below the 50 dma all week.

This week’s trading was almost the exact opposite of last week. The S&P 500 gained 3.4%, but NASDAQ and the Russell 2000 were hot at +5.0% and +4.3%, respectively.

 I believe the market has presumed a rate reduction from the Fed next week. As I see interviews and reports on the financial networks, the argument I hear is not whether they will announce a rate reduction, but whether it will be a reduction of 25 or 50 basis points. The year over year CPI numbers now stand at +2.5%. While that is moving in the right direction, Jerome Powell has been very firm about a target of 2%. If the Fed holds pat next week, it could be ugly.

I closed my September SPY condors for +12.2% and the September SPX iron condors for +16.7% today, but I will wait until after the Fed announcement to open the November positions for those services. On the other hand, if the FOMC reduces rates by 50 basis points next Wednesday, we may see new market highs.

I will close our QQQ iron condor before the announcement next week. Be cautious; take risk off the table where you can. We could have some rough seas.