The Standard and Poors 500 index (SPX) closed today at 6836, up three points for effectively no gain (0.05%). SPX opened the week at 6917, setting up a weekly loss of 1.2%. SPX broke down through the 50 dma yesterday and tried to recover today but could not make it back to the 50 dma. Trading volume ran slightly above average for the week.

VIX, the volatility index for the S&P 500 options, opened the week at 18.0% and closed today at 20.6%. The intraday high this week occurred this morning at 22.4%. A VIX reading at 20-22% isn’t consistent with the recovery we might be tempted to read into today’s trading action.

I monitor the movement of high beta stocks by tracking the ETF containing the top 100 S&P 500 stocks ranked by beta, SPHB. SPHB closed today at 122.6 for a one percent gain. SPHB opened the week at 122.6, setting up a weekly gain of zero, a flat trading week. Trading volume was above average only on Thursday. SPHB broke its 50 dma early this morning but recovered quickly. 

The NASDAQ Composite index closed today at 22,547, down 50 points or -0.2%. NASDAQ opened the week at 22,952, setting up a weekly loss of 1.8%. NASDAQ is a long way from recovering its 50 dma at 23,358. NASDAQ’s trading volume fell below the 50 dma today.

The question for the week: Did the S&P 500 index signal a bottom today?

Key facts:

1)    Today’s low around 6800 coincides with lows set on February 5 and January 20.


2)    SPX lost 136 points yesterday but only gained 80 points at its high today.


3)    SPX weakened this afternoon and closed nearly at Thursday’s close.


4)    Today’s low in SPX around 6800 is close to the lows set on 1/20 and 2/5.

My conclusion: We would like to read a “finding support and recovering” from this chart. The observations above don’t support that conclusion. Today’s market action could be the first step of recovery, but I wouldn’t risk my money on that premise. 

Don’t be spooked. Follow your rules. Discipline is crucial.