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Do you know any trading coaches who discuss the market candidly without any marketing hype? Dr. Duke publishes a weekly newsletter and shares the track records of his trading services. If you have questions about any of his services, Ask Dr. Duke.

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The Standard and Poors 500 index (SPX) closed today at 4123, down 24 points or 0.6%. The initial response to the FOMC announcement on Wednesday was positive, but that wore off quickly with SPX trading off significantly the last two days. Trading volume was modestly above the 50-day moving average (dma) this week.

VIX, the volatility index for the S&P 500 options, opened Monday at 30%, traded as low as 25% on Wednesday before spiking higher and closing today at 30%. This level of volatility is not modest, even if we are becoming accustomed to it. Remain vigilant.

The NASDAQ Composite index closed at 12,145 today, down 173 points or 
1.4%, and down 1.5% for the week. Trading volume ran below the 50 dma all week. Monday’s intraday low is a 23% correction since the January highs for NASDAQ.

Last Friday’s low was the low for that week, and today’s close was this week’s low. The only good news is the appearance of the broad market finding a support level this week. Of course, I may be proven wrong next week. NASDAQ closed today just below the lows set on Monday and Thursday. SPX’s low on February 24th was around 4115 and trading this week appeared to be trading right along that line.

We have suffered through a lot of bad news: record levels of inflation, FOMC moving to raise interest rates and shrink the money supply and, to top it all off, a negative GDP growth number for the first quarter.

I remain largely in cash, although I did venture out with a couple of trades late in today’s trading session. Those trades were a result of my observations that the market appeared to be finding support this week.
The trades I entered today are just my “toe in the water”. My posture remains very cautious, largely in cash with close stops on the few positions in play.

The Standard and Poors 500 index (SPX) closed today at 4132, down 156 points or 3.6%. SPX closed the week down 2.9%. If I put on my rose-colored glasses, I would point to Monday and Thursday’s moderately bullish trading sessions. The pessimist (or realist) might note that the market closed at or very near the lows for the day both on Tuesday and today. Why is that significant? When the market trades down strongly, buyers often come into the market to buy what they consider bargains. When that doesn’t happen, it is a dire warning. Adding to the negativity was increasing trading volume. SPX’s trading volume was above the 50-day moving average (dma) every day this week. Increased volume reinforces the observed trend, in this case, a bearish trend.

VIX, the volatility index for the S&P 500 options, opened Monday at 30% and closed today at 34%. These levels of volatility aren’t quite back to those of early March, but they are close. I track the Russell 2000 index with the IWM ETF. IWM closed today at 184.95, down 2.9%. IWM opened the week at 190.99, resulting in a loss of 3.2% for the week. IWM is trading at levels not seen since December 2020. IWM is down 22% this year.

The NASDAQ Composite index closed at 12,335 today, down 537 points or 
4.2%, and down 3.2% for the week. Trading volume ran below the 50 dma all week. Today’s close represents a 22% correction since the January highs for NASDAQ.

My rose-colored glasses are ruined. I was stomping on them today. It is difficult or impossible to put a positive spin on this market. The S&P companies have now hit corrections of 14% three times this year. NASDAQ and the Russell 2000 are now down 22%. Unfortunately, I don’t see any light in this tunnel. Inflation is setting records. The Fed is reducing the money supply and raising interest rates to fight inflation. Powell appears to be hinting at a half percent rate increase at the meeting next week. We just set our first negative GDP number for the first quarter. Economists label the economy as in a depression after two successive negative GDP declines.
I am largely in cash now, and plan to stay there or may even close more trades. I may be 100% in cash by the Fed meeting. The only exceptions are my index condor trades. They are doing well. My Flying With The Condor™ service is up 16% through April and the May and June positions both remain in the black. But even those positions may be adjusted next week.
I am going to have to see some solid market growth before venturing out with any new trades.

The Standard and Poors 500 index (SPX) closed today at 4488, down 12 points or 0.3%. SPX closed the week down 1.3%. The only good news that trading appears to have stabilized over the past three trading sessions. Resistance from early February has proven formidable. Trading volume ran below the 50-day moving average (dma) again this week – no conviction.

VIX, the volatility index for the S&P 500 options, opened Monday at 20.8% and closed today at 21.2%. Declining VIX over the past two days underscores the sideways nature of recent trading. The large players aren’t concerned about a large decline.

I track the Russell 2000 index with the IWM ETF. IWM closed today at 197.87, down 0.3%. IWM opened the week at 207.87, resulting in a loss of 2.4% for the week. IWM is again below both its 50 dma and its 200 dma.

The NASDAQ Composite index closed at 13,711 today, down 186 points or 
-1.3%, and down a whopping 4.1% for the week. Trading volume ran below the 50 dma almost the entire week.
Last week’s market began to show the resistance set by the highs in early February but Wednesday’s gap down on the broad market indices was a large step lower.

The one redeeming factor for this week’s market is the trading of the S&P 500 right along that 200 dma. At least the bleeding has stopped – for now. NASDAQ and the Russell 2000 are leading the market lower. Defensive stock sectors such as utilities and healthcare are gaining and technology and transportation stocks are being sold. Increasing fuel costs are certainly a factor in transportation but these stocks are also sensitive to declining economic growth. Rising interest rates will be a headwind for economy and, in turn, the stock market.

My trading stance is unchanged. I am cautious about entering new trades; I take profits whenever I can rather than hold and hope for larger gains; I close the losers quickly. So far it doesn’t appear the markets are declining farther, but I remain cautious.

 

The Standard and Poors 500 index (SPX) closed yesterday at 4546, up 15 points or 0.3%. SPX closed the week nearly unchanged with a 0.1% gain. The good news was a recovery from yesterday’s intraday lows at 4508. Resistance from early February has proven formidable. Trading volume was well below the 
50-day moving average (dma) all week.

VIX, the volatility index for the S&P 500 options, opened Monday at 22.1% and closed yesterday at 19.6%. VIX is now approximately at the levels of early February before the market declined for the second correction.

The NASDAQ Composite index closed at 14,262 yesterday, up 41 points or +0.3%, and up +0.6% for the week. Trading volume was modest, running around the 50 dma most of the week.

Last week’s market began to show the resistance set by the highs in early February and the bounce off of that resistance was even more clear this week. My trading stance is unchanged. I opened some new trades this week for my trading group, but I closed several trades in my Conservative Income service to avoid the weekend risk. I am proceeding cautiously.

 

The Standard and Poors 500 index (SPX) closed today at 4543, up 23 points or 0.5%. SPX closed the week with a 1.8% gain. After last week’s very strong gains, a bit of sideways choppiness was to be expected. Trading volume was not only below average all week but steadily declined each day this week. It may be difficult for SPX to break through resistance at the highs of early February.

VIX, the volatility index for the S&P 500 options, declined steadily this week, opening Monday at 25.1% and closing today at 20.8%. That decline is seductive but recall that VIX is now where it was in early February before the market took another run to establish a lower correction.

I track the Russell 2000 index with the IWM ETF. IWM closed today at 206.12, up less than a half a point, or 0.1%. IWM recovered its 50 dma last week but stalled and traded sideways this week. The Russell 2000 is not leading this bull market.

Similar to the Russell 2000, the NASDAQ Composite index recovered its 50 dma last week, but NASDAQ continued its gains, closing at 14169 today for a 2.2% increase this week. Trading volume was modest, running around the 50 dma.

Last week’s market was strong with SPX, NASDAQ and the Russell 2000 all recovering their 50-day moving averages. But the market proceeded more cautiously this week, making only modest gains. It appears that the resistance set by the highs in early February may be starting to slow this market. I would feel more positive if the Russell 2000 began to lead this market higher, but we may have too many headwinds for that degree of bullish strength.

Proceed cautiously.

 

 

The Standard and Poors 500 index (SPX) closed today at 4463, up 51 points or 1.2%. SPX opened the week at 4203 and ended the week with an impressive 6.2% increase. Trading began to strengthen on Tuesday and took off the rest of the week. Trading volume was below average most of the week but spiked strongly higher today. Usually, I would interpret that volume spike as an endorsement of the market’s move higher, but today is quadruple witching which always causes a large volume spike as four major derivatives are settled each quarter.
 
VIX, the volatility index for the S&P 500 options, declined steadily this week, opening Monday at 31.0% and closing today at 22.9%. That is a large decline. Is the market recovery really here?

The NASDAQ Composite index also turned in a positive week of trading with an 8.6% gain, outperforming all of the broad market indices. NASDAQ closed today at 13893 with a gain of 279 points. Of course, NASDAQ took significant losses in this correction, so one would expect it to run faster when the skies cleared. NASDAQ trading volume ran above the 50 dma all week and spiked higher on quadruple witching today.

Jerome Powell and the FOMC said all of the right things this week and really encouraged the market. It isn’t common to see four days of advances like we saw this week. Now the question becomes whether we continue to see strong advances or perhaps we will see the classic stair step advance with occasional “breathers” starting next week.

I am beginning to put additional capital to work in this market, but I am proceeding cautiously.

The Standard and Poors 500 index (SPX) closed yesterday at 4204, down 55 points or 1.3%. SPX opened the week at 4327 and ended the week down by 2.8%. Trading began very weakly on Monday and declined 3.6% by the close on Tuesday. Trading the balance of the week kept SPX largely on a sideways track. Trading volume of the S&P 500 companies spiked early in the week but declined the rest of the week, moving below the 50-day moving average (dma) Thursday and Friday.

VIX is the volatility index for the S&P 500 options, and it declined steadily this week, opening Monday at 35.9% and closing yesterday at 30.8%. Volatility remains elevated; don’t let your guard down.

The NASDAQ Composite index followed all of the broad market indices yesterday and closed down 2.2% at 12844. NASDAQ opened the week at 13328, so NASDAQ remains the weakest index this week with a decline of 3.6%. NASDAQ trading volume ran above the 50 dma all week.

The broad market indices traded largely down and then sideways this week. On 2/24, the S&P 500 index traded down to 4115 before recovering a bit to close at 4156. This is the latest area of support during this correction. Tuesday’s low this week at 4158 bounced off that support level and yesterday’s close was well above those levels.

Thus far, the news from Ukraine has not done any more damage to the stock market. I believe the bullish foundation that seems to support this market is largely due to the relaxing of the Covid restrictions and the expected strengthening of  the economy. The primary hobgoblins worrying the market are record-setting levels of inflation coupled with the Fed’s expected increase of the discount rate next week. A quarter point rate increase is probably priced into this market, but a half point increase might push traders to sell.

The broad market indices are largely trading sideways as the FOMC meeting approaches, albeit a very choppy sideways movement.

I have had good results with small positions in oil and gold stocks, e.g., the GLD spread I sent to newsletter subscribers on 2/22. But I remain largely in cash and will wait on the FOMC announcement and the market’s reaction before changing that position.

 

The Standard and Poors 500 index (SPX) corrected 12% on January 24th and then the market moved to retest that correction on February 24th and broke through to a new low of -14% (It makes you wonder what will happen on March 24th). SPX closed today at 4329, down 35 points. SPX opened the week at 4354 and ended the week down by about half of one percent. Trading volume of the S&P 500 companies ran above the 50-day moving average (dma) all week.

VIX, the volatility index for the S&P 500 options, was very choppy this week but largely unchanged, closing today at 32.0% after beginning the week at 32.4%. Volatility remains elevated; don’t let your guard down.

The NASDAQ Composite index gapped open lower today and closed at 13,313, down 225 points on the day and down 1.9% for the week. NASDAQ trading volume ran above the 50 dma all week but fell below the average today.

The broad market indices traded sideways this week, with the Russell 2000 and NASDAQ trading lower. SPX pulled back this morning but recovered much of that loss going into the early afternoon. The intraday low for SPX bounced off the support level formed by trading last Friday and on Tuesday this week. That shows the bullish sentiment that is holding this market up after these bearish twitches.

News and rumors from Ukraine may spook this market at any time. Relaxing the Covid restrictions here in the states will strengthen the economic recovery but concerns about inflation will intensify as cost data increase, fueled in part by higher oil prices. Uncertainties over the Fed’s expected increase of the discount rate as the March FOMC meeting approaches (March 15-16) will likely result in a choppy, sideways market.

Considerable damage has been done to our markets since late January. SPX remains below its 200 dma. The 50 dma of the Russell 2000 and NASDAQ have crossed the 200 dma, heading lower. All of these markets have a long ways to go for a full recovery. All in all, remaining largely in cash and being very conservative with your investments remain sound advice.

We were treated to a classic retest of the previous correction low this week, with the Standard and Poors 500 index (SPX) reaching a intraday low yesterday of 4115, for a correction of 14% since the open on January 4th. SPX came off that low yesterday very strongly and that performance was followed by a gap opening higher this morning and a gain of 96 points or +2.2% to close at 4385. Of course, that leaves us with the question of whether this is the last retest or, worse yet, will we break through at some point and try for 20% down? Trading volume of the S&P 500 companies was above average most of the week with a spike yesterday.

VIX, the volatility index for the S&P 500 options, spiked up to an intraday high of 38% on Thursday, but ended the day just above 30%. VIX opened this morning at 32% and closed down at 27.6%.

I track the Russell 2000 index with the IWM ETF. IWM closed today at 202.50, up 4.46 points, up 2.3% on the day. The gains of the past two days were sufficient to leave IWM in the black by +0.7% for the week.

The NASDAQ Composite index closed today at 13,695, up 201 points or 0.7%. NASDAQ opened the week at 13,735, so even the strong gains over the past two days could not quite make up for the losses earlier in the week.

Trading in the last week of January seemed to be concluding that a correction of 11% was about right. This week’s trading seems to suggest 14% is a better estimate. Traders have many worries on their minds: the Ukraine crisis, the economic effects of relaxing Covid restrictions, very high inflation rates and higher interest rates resulting from the FOMC meeting in March.

All in all, remaining largely in cash and being very conservative with your investments remain sound advice.

The Standard and Poors 500 index (SPX) had another rough day, closing down 31 points to 4349, down 0.7% on the day and 1.5% on the week. The approximate low of the correction during the last week of January was 4300, so today’s closing price is getting close – will SPX find support and bounce? Or will the index break through and perhaps begin a severe market crash of 30%, 40%, or even more? Trading volume of the S&P 500 companies was below average all week, rising slightly above the 50 dma today.

VIX, the volatility index for the S&P 500 options, opened this morning at 27%, moved as high as 30% and then pulled back somewhat to close at 28%. One might say the smaller increase in volatility didn’t match the severe sell off of the past two days. Is that a sign of the negativity lessening? Maybe.

I track the Russell 2000 index with the IWM ETF. The owners of Russell have priced everyone out of the Russell 2000 index and option data. That is why I plot the IWM prices. IWM closed today at 199.47, down 1.73 points, down -0.9% on the day and down 1.1% for the week.

The NASDAQ Composite index closed today at 13,548, down 169 points or 1.2%. NASDAQ opened the week at 13,769, resulting in a weekly loss of 1.6%. NASDAQ has been hit hard by this correction. NASDAQ’s 50 dma and its 200 dma are very close to 14700. NASDAQ is now trading 1152 points below those moving averages. Put another way, NASDAQ would have to gain 8.5% to regain those moving averages. NASDAQ trading volume was below average all week.

With the S&P 500 index solidly under its 200 dma, we are experiencing a serious correction. Some technical analysts call any decline less than 10% just a minor pull back. The low toward the end of January was down about 11%. This correction isn’t irrational. We are setting records with recent measures of inflation. A more serious fear for traders is the Fed’s cure for inflation: ending their bond purchases (pumping up the money supply) and increasing the federal discount rate, the interest rate charged banks by the Federal Reserve. Both will put a strong damper on economic growth and hence stock prices.

That brings us to the key question: How much damage will that cause for the markets? Down 11%? Down 25%? More? Market pricing always reflects traders looking forward, predicting the price trend, and placing their bets (trading). You could say the majority opinion in the last week of January was trimming 11% was about right. Will that hold, or are traders starting to worry that the economy might be harder hit by inflation and higher interest rates?

The market seems to be oscillating between mild bullishness and panic. If the covid restrictions continue to decline, that will tend to stimulate significant recovery and growth. But if the next round of CPI and PPI data move higher yet, all bets are off.