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The Standard and Poors 500 index (SPX) closed today at 6013, down 108 points or 1.7%. SPX opened the week at 6122, down 1.8% for the week. Trading volume ran along the 50-day moving average (dma) all week and was only up modestly on today’s sell-off. The only good news was SPX finding support at the 50 dma.
VIX, the volatility index for the S&P 500 options, opened the week at 15.6% and trended sideways until today when VIX spiked to 19% and closed the day at 18.2%.
I track the Russell 2000 index with the IWM ETF, which closed today at 217.8, down 6.5 points or -2.9%. IWM opened the week at 226.2 for a weekly loss of 3.7%. IWM trading volume ran well below the 50 dma all week but spiked to almost double the 50 dma today.
The NASDAQ Composite index closed today at 19,524, down 438 points or
-2.2%. NASDAQ opened the week at 20,041, setting up a weekly loss of 2.5%. NASDAQ’s trading volume ran along the 50 dma this week.
As I discussed in the last newsletter, this year’s markets have been very choppy, making it challenging for traders. The new administration is moving at record speed, and I think that creates uncertainty about the future. The market effectively prices the future into today’s trading and institutional traders are uncertain what may be around the corner. These changes may be good for the economy and the markets, but that is difficult to ascertain with much confidence.
The FOMC is remaining calm and deliberate and clearly does not want to release the interest rate brakes too quickly.
The S&P 500 is an excellent measure for the overall market, and it has been extremely volatile this year. SPX lost nearly two percent today alone. On the other hand, look at the market’s trading volume. It was only up modestly today. Trading volume actually declined on the NASDAQ Composite. The signs of institutional traders “throwing in the towel” aren’t there - at least not yet.
Each day brings another explanation for the weakness. Yesterday it was blamed on the weak forward guidance Walmart delivered Wednesday evening. Today it was blamed on reports of United Health being the subject of a DOJ investigation into Medicare billing. The market is nervous and tips over easily. Investors Business Daily downgraded their recommended stock market exposure yesterday and then again today.
Be cautious.
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The Standard and Poors 500 index (SPX) closed today at 6026, down 58 points, nearly one percent. SPX opened the week at 5970, +0.9% for the week. It is interesting to note the pattern: each of the three Fridays traded up to the all-time high of 6100 on 12/06. It broke through on 1/24 but fell short on 1/31 and again today. Trading volume was barely above the 50-day moving average (dma) this week.
VIX, the volatility index for the S&P 500 options, opened the week at 20.4% and moved lower, closing Thursday at 15.5% but then gained one point to close today at 16.5%.
I track the Russell 2000 index with the IWM ETF, which closed today at 226, down nearly three points or -1.2%. IWM opened the week at 222 for a weekly gain of 1.8%. IWM trading volume spiked above the 50 dma Monday and today. The Russell 2000 isn't leading the market higher or lower.
The NASDAQ Composite index closed today at 19,523, down 269 points or
-1.4%. NASDAQ opened the week at 19,215, setting up a weekly gain of 1.6%. NASDAQ’s trading volume rose above the 50 dma on Monday, but ran well below average the balance of the week.
The markets have been very choppy this year, with the S&P index making strong runs for a few days, then giving it all back and then repeating the process. That makes it very difficult for traders to lock in gains, unless you are a day trader. I think this choppiness is principally due to three factors:
• The ultimate economic effect of Trump’s tariff threats,
• Federal reserve discount rate changes, and
• The economic fallout of the global AI competition.
All of these three issues may have significant economic effects, and the market is largely clueless which way it might go. The new administration is moving at record speed and that thrills some but terrifies others, especially those who have been benefiting from federal grants.
The FOMC is remaining calm and deliberate and clearly does not want to release the brakes too quickly.
The effect of DeepSeek has certainly gotten the world’s attention, and especially our own high-tech companies, who may have assumed their only competition was within their exclusive “club”.
The ultimate impacts of all of the above are largely unknown at this time and that has the market spooked. It does not like uncertainty. That foretells a rough ride for those of us who actively trade the markets. Be cautious and be nimble. "Hold and hope" may be especially dangerous to your financial health.
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The Standard and Poors 500 index (SPX) closed today at 5997, up 59 points or 1.0%. SPX opened the week at 5782, gaining 3.7% for the week. Trading volume ran near the 50-day moving average (dma) all week.
VIX, the volatility index for the S&P 500 options, opened the week at 21.2% and closed today at 16.0%, down almost twenty five percent today.
I track the Russell 2000 index with the IWM ETF, which closed today at 224.4, up 3.3 points or 1.5% on the day. IWM opened the week at 220.7 for a weekly gain of 1.7%. IWM trading volume ran close to the 50 dma this week.
The NASDAQ Composite index closed today at 19,630, up 292 points or +1.5%. NASDAQ opened the week at 18,904, setting up a strong weekly gain of 3.8%. NASDAQ’s trading volume ran below the 50 dma most of the week, jumping up a bit today.
The last five trading days of December and the first two days of January have become known as the Santa Claus rally. Unfortunately, Santa didn’t come to Wall Street this year (down 0.7%).
The Stock Trader’s Almanac also tracks the first five days of January trading as a forecast for the year ahead. Positive gains for the first five days of January have preceded a positive year for the S&P 500 index 83% of the time. the first five days of January trading came in at +0.6% this year.
Now we wait for the January Barometer, which tracks the full month’s trading gain or loss. A positive January Barometer has predicted a positive S&P 500 gain with 73% accuracy.
I have been frustrated in my trading the markets since the highs in early December – many false starts and quick turnarounds, shaking me out of trades. This week's gains give me some hope for the new year.
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The Standard and Poors 500 index (SPX) closed today at 6041, down 31 points or 0.5%. SPX opened the week at 5969, gaining 1.2% for the week. Today’s trading broke the earlier all-time high at 6119 on 1/23, but it could not hold that high. Trading volume ran above the 50-day moving average (dma) all week.
VIX, the volatility index for the S&P 500 options, opened the week at 18.8% and moved lower all week, but rose almost one point to close today at 16.4%.
I track the Russell 2000 index with the IWM ETF, which closed today at 226.5, down 2.1 points or -0.9% on the day. IWM opened the week at 220.7 for a weekly gain of 1.7%. IWM trading volume spiked above the 50 dma today. IWM has traded in a tight range of 225-230 for the past eleven days.
The NASDAQ Composite index closed today at 19,627, down 54 points or
-0.3%. NASDAQ opened the week at 19,234, setting up a weekly gain of 2.0%. NASDAQ’s trading volume ran below the 50 dma most of the week, but spiked higher today.
The Stock Trader’s Almanac tracks three primary indicators for predictions for the annual gains for 2025:
• The Santa Claus rally, the last five trading days of December and the first two days of January, failed this year, down 0.7%.
• The first five days of January trading was positive at +0.6%.
• The January Barometer, which monitors the full month’s trading gain or loss, came in at +2.3% this year.
This combination of a negative Santa Claus rally, with a positive first five days and a positive January Barometer has only occurred three times with subsequent average annual gains of 15%.
However, just focusing on the January Barometer alone has a solid track record. Positive returns in January are followed by positive annual returns 89% of the time.
While the Stock Trader’s Almanac prediction for the year is positive, the choppiness we have observed thus far this year has been principally due to three factors:
• The ultimate economic effect of Trump’s tariff threats,
• Federal reserve discount rate changes, and
• The economic fallout of the global AI competition.
That leaves me long term bullish, with a strong dose of caution surrounding key economic news. Thus, I expect a positive 2025, but laced with significant choppiness, much as we have seen this past month. Be cautious.
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The Standard and Poors 500 index (SPX) closed today at 5942, up 74 points or 1.3%. SPX opened the week at 5921, gaining 0.4% for the week. Trading volume ran well below the 50-day moving average (dma) all week, typical of holiday markets.
VIX, the volatility index for the S&P 500 options, opened the week at 17.2% and closed today at 16.1%, down almost 10% today.
I track the Russell 2000 index with the IWM ETF, which closed today at 224.4, up 3.3 points or 1.5% on the day. IWM opened the week at 220.7 for a weekly gain of 1.7%. IWM trading volume ran close to the 50 dma this week.
The NASDAQ Composite index closed today at 19,622, up 341 points or 1.8%. NASDAQ opened the week at 19,460, setting up a modest weekly gain of 0.8%. NASDAQ’s trading volume ran above the 50 dma all week.
The Santa Claus rally was discovered by Yale Hirsch, the founder of the Stock Trader’s Almanac. The last five trading days of December and the first two days of January have averaged a positive 1.3% gain since 1969 through 2023. Unfortunately, Santa didn’t come to Wall Street this year (down 0.7%).
The Stock Trader’s Almanac also tracks the first five days of January trading as a forecast for the year ahead. Positive gains for the first five days of January have preceded a positive year for the S&P 500 index 83% of the time. After two days, SPX is up 0.7%.
The January Barometer tracks the full month’s trading gain or loss. A positive January Barometer has predicted a positive S&P 500 gain with 73% accuracy.
This market has been challenging to trade since the S&P 500 index hit its most recent high on December 6th. SPX traded lower almost immediately and then did a quick turnaround and almost recovered that previous high. But then the market gave it all back during the closing days of December. It has been very frustrating to see tentative gains and then watch them disappear just as quickly. Fortunately, our Apple spread survived the chaos with a nice gain.
Today’s positive market gains give me hope for a better new year.
