Hi Shoppers,

The S&P 500 (SPY) is sitting on the same support level it has bounced from three times now.

Back in November, I argued the S&P was nearing a bottom at key pitchfork support that had held multiple times

Each bounce got sold. Each rally was short-lived.

And this time, the test is happening while the bond market, gold, commodities, and the dollar are all acting like they forgot how they're supposed to move together.

Here's what I'm seeing.

Three Bounces, Three Fades

The S&P has tagged this support zone three times and bounced every time. That sounds bullish until you notice each bounce has been weaker and shorter than the last. The buyers show up, but they don't stick around.

The good news is the index managed to close above the 200 day moving average again. As I always say, the close is more important than the intraday action. That is the one thing keeping this from looking worse than it already does.

The Bond Market Is Flashing a Warning

Check out the two year Treasury chart from Thursday.

A huge spike and reversal. That is a shooting star candle, a pattern that signals a possible change in the uptrend. We need confirmation with the next move lower, but that kind of action doesn't happen in calm markets. It happens when funds are unwinding positions fast.

MarketWatch reported we haven't seen these kinds of patterns since months before the 2008 financial crisis. That sounds alarmist, and of course they need flashy headlines. But when bonds, gold, silver, and oil are all swinging wildly and their normal correlations are breaking down, the charts are telling you something is shifting underneath the surface. You don't need a crisis comparison to take that seriously.

Triple Witching Will Tell the Story

I'm watching for how the S&P handles Friday. Triple witching means a massive number of contracts expire and a lot of money has to move. If this support holds through that kind of volume, it earns the right to rally. If it doesn't hold, we can move quite a bit lower.

Be prepared and stay nimble.

Thank You For Reading … See You Next Tuesday,

Licia