The Standard and Poors 500 index (SPX) closed today at 5,996, up 22 points or +0.4%. SPX opened the week at 5,725, gaining 4.7% for the week. Trading volume spiked up on the day following the election and declined the rest of the week, although it remained above the 50 day moving average (dma).

VIX, the volatility index for the S&P 500 options, opened the week at 22.5% and declined after the election, closing the week at 14.9%. The combination of the election and the FOMC meeting greatly reduced market uncertainty.

I track the Russell 2000 index with the IWM ETF, which closed today at 238.1, up 1.7 points or +0.7% on the day. IWM opened the week at 218.5 for a weekly gain of 9.0%. IWM gapped open the day after the election with a gain of 12.4 points or 6%. The IWM trading volume spike on 11/6 exceeded even that of the correction in early August.

The NASDAQ Composite index closed today at 19,287, up 17.3 points or 
+0.09%. NASDAQ opened the week at 18,220, setting up a substantial weekly gain of 5.9%. NASDAQ’s trading volume ran above the 50 dma all week, but its largest spike was on the second day following the election.

Wow! To say the market was energized by the election results is an understatement. IBD immediately upgraded their recommended stock market exposure to 
80-100% after Tuesday’s election results.

The FOMC met Wednesday and Thursday and that certainly added to this week’s market uncertainty. The committee unanimously recommended a twenty five basis point reduction in the federal discount rate, resulting in a range of 4.50% to 4.75%.

The net result of both of these events was a strong bullish run in the markets and a significant reduction in market volatility with the VIX declining to 14.9% after opening the week at over 22%.

Weekly gains for the S&P 500 stocks, the NASDAQ Composite and the Russell 2000 index climbed 4.7%, 5.9% and 9.0%, respectively. This is in line with the average beta values of the stocks populating those indices. Higher beta stocks run faster in bullish markets as compared to the S&P 500 stocks. But they also outperform the S&P in the run lower in bearish markets. High beta stocks are the classic “risk on” and “risk off” stocks.

We closed last week boarding up the windows of our portfolio. This week we find ourselves relieved and out searching for opportunities. We closed our QQQ iron condor for a nice gain of 19% before the election. I plan to open a new one next week.