S&P
Morning Bias
| MON morning signal (triggered at 10:15 ET) | SPX | ES |
| Bias-up: above | 2810.75 | 2815.75 |
| …would target | 2819.50 | 2824.50 |
| Bias-down: under | 2798.50 | 2803.50 |
| …would target | 2790.50 | 2795.50 |
| Signal status: BIAS-DOWN, BIAS-DOWN TARGET EXCEEDED | . | |
| BIAS VIDEOS… INTRO // EXAMPLE | ||
1. At 10:15, trading above the bias-up signal or under the bias-down signal would put into play a test of its bias-up or bias-down target.
2. Not triggering either bias signal at 10:15 would be “no-bias,” and the bias signals should define the bias environment’s range.
— A test of the opposite bias signal would be targeted if one bias signal was tested before triggering no-bias.
3. Touching the bias signal within 3 minutes either way of 10:15 would invoke a grace period through 10:30 to trigger a late signal.
— “Late” signals don’t require testing the opposite bias signal, but it’s still likely.
4. Still testing the bias signal at 10:30 after invoking the grace period would trigger “noN-bias,” with no bias influence.
Market Wrap (recording & summary)
Don’t discount Friday’s complete retracement of Thursday’s rally. It was the resumption of distribution that we began identifying Monday. Then Tuesday. And Wednesday. Friday’s drop proves what we had assumed at Thursday’s close, that the intraday rally was only a function of having dumped all of that ballast Monday, Tuesday, and Wednesday. It was not strong-handed buying.
And distribution by that crowd, for that duration, is positioning for more than one week of problems that they see off on the horizon. Like Friday’s 2-point surge in the 30-year triggering a Cup & Handle pattern, if more than just the strong hands are distributing, then capitulation isn’t far behind.
Had Thursday’s rally stuck, and the overnight dip held Friday as only backing-and-filling, then perhaps this week’s reversal could be explained away as volatility ahead of the next upleg. I would still be wary in this range of potential for one more probe higher. But there’s no “unfinished business” above, and ending the week in decline reflects a continued vulnerability to a much steeper, deeper decline.
Of course, it always seems darkest before the dawn. And, more on point, bull markets have a way of stepping right up to the brink, and then reversing. I’ll be monitoring for any signs that sellers are done, because the reaction up would far exceed the week’s highs.
Meanwhile, the week-ending decline did satisfy unfinished business below at 2806.25 by 1 point. The next lower support is 2801.00, and then 2751.00. Probably as only a correction, possibly as a deeper correction, and potentially as a retest of the Christmas low.
Details and other markets coverage are discussed in the post-market Wrap recording here.
REMINDER: NO SATURDAY REVIEW THIS WEEKEND DUE TO TRAVEL.
Daily Spot…
A daily summary of high-profile members of several complexes… View a more detailed discussion of each chart at the end of today’s Market Wrap.
Eurodollar Jun Contract (EC, ETF: (FXE, UUP))
Thursday’s rejection of Wednesday’s weak-handed surge had triggered its 1.1465 sell signal, which extended down overnight. Friday morning’s gap down under the original 1.1405 sell signal that was originally avoided and extended down sharply to attack 1.1350. The second consecutive lower close confirmed that at least an eventual third lower close is in-play, but bounces should now hold 1.1425.
Gold Apr Contract (GC, ETF: (GLD))
Bouncing overnight into Thursday’s open retraced 61.8% of Thursday’s intraday drop. The morning held up, trying to probe a little higher. Maintaining the recovery through the close would signal the rally has resumed.
Silver May Contract (SI, ETF: (SLV))
Overnight strength up to 15.55 retraced 61.8% of Thursday’s intraday drop before returning to Thursday’s 15.38 low. Back above 15.55 is still needed to signal the rally has resumed.
30-year Treasury Jun Contract (US, ETF: (TLT))
Friday’s gap up into a 2-point intraday rally to 149-04confirms what was already being signaled above 146-00 and by holding tests of 145-16 — that a bottom is in. Now it is obvious to the world, so the pattern become vulnerable to another pullback. Room down to 147-17/147-25 would keep alive upside momentum without having to fill gaps down to 146-04 or test “lower prior highs.”
Crude Oil May Contract (CL, ETF: (USO, USL) (UWTI-long, DWTI-short))
Thursday’s failure to confirm Wednesday’s breakout had opened the door to a deeper pullback if Friday did not immediately extend higher. Friday did not immediately extend higher, as overnight weakness under the 59.50-59.75 pullback limit accelerated down to attack 58.25. Coinciding with previously influential uptrending support, Friday’s dip must be rejected immediately back above 59.35 to avoid a deeper pullback targeting 56.50.
Natural Gas Apr Contract (NG, ETF: (UNG, UNL))
Failing to greet Thursday’s EIA from a position of strength by not holding 2.84 Wednesday has extended down again overnight to 2.72. Intraday lows held 2.75, but any lower coming out of the weekend could slide back to 2.72 and lower.
Mid-day Update… Choppy, but droppy.
No windows are being rejected.
This is this week’s fourth reversal of a substantial bounce. And this was the biggest reversal, ending at the lowest level. 
Yesterday’s rally was a function of all the ballast that had been dumped during the three prior intraday reversals. But as I described during the Market Tour, strong-handed distribution isn’t positioning for a 2-3 day correction. The pullback’s ultimate low could be 2-3 weeks away. And much lower.
The open’s bounce had an opportunity to reject the overnight slide. But the bounce was rejected, aggressively, quickly falling to touch the next lower objective at 2830.75. Its reaction offered an opportunity to reject the post-open slide. But that bounce was also rejected by sharply lower lows. The noon hour entry attacked 2809.00, already retracing yesterday’s pre-open 2813.75 low.
Now having avoided triggering this afternoon’s 2813.00 bias-down signal — which is still being tested — there’s another opportunity to reject the slide. Friday Factors could help to trigger a short-squeeze, but there’s no requirement to bounce at all. And there’s no requirement to resume the decline today, but those Friday Factors: the growing realization of this being a distributive market is greeting two days of impending illiquidity. Refer to the first paragraph.
Look ahead: Economic Calendar – for Mon Mar 25, 2019
A midday look ahead in preparation for economic reports and events scheduled for the next trading day.
Highlights: Monday’s two econ reports are high-profile, but neither is reliably influential to price action. The pre-open Fed speaker might be high-profile, but is too early to have an intraday effect.
Patrick Harker Speaks
6:30 AM ET
Chicago Fed National Activity Index
8:30 AM ET
Dallas Fed Mfg Survey
10:30 AM ET