The Standard and Poors 500 index (SPX) continued its bullish trend this week with a gain of 3.4% for the week after gap openings the past two mornings. SPX closed today at 5687, up 83 points or 1.5% on the day. SPX opened the week at 5233 and closed today at 5525 for a weekly gain of 5.6%. However, trading volume remains below the 50 day moving average (dma). That suggests that the large players remain on the sidelines.

VIX, the volatility index for the S&P 500 options, steadily declined this week, opening at 25.8% and closing today at 22.7%. That level of volatility suggests that many market participants remain moderately concerned.

I track the Russell 2000 index with the IWM ETF, which gapped open this morning and closed at 200.4, up 2.3% for the day and up 3.1% for the week. IWM’s trading volume is running well below average, as it is for the S&P 500 and NASDAQ indices.

The NASDAQ Composite index closed today at 17,978, up 267 points or 
+1.5%. NASDAQ opened the week at 17,391, setting a weekly gain of 3.4%. NASDAQ’s trading volume has run well below average for the past three days.

This week gave us the first signs of a possible recovery as SPX gapped open Thursday morning and traded higher on above average volume. The S&P stocks continued higher on Friday. IBD had declared 4/22 as the Follow Through Day (FTD) but that bullish day occurred with below average trading volume. Thursday’s gap opening and continued move higher with increased volume fit the criteria better. I now feel more confident about beginning the process of slowly re-entering the market.

I have begun to place a few small trades, but I remain cautious. Weak trading volume is my primary concern and the VIX remains high at 23%. Be patient. Remain largely in cash. Keep your stops tight.