S&P 500 sees early dip below February intraday low

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S&P 500 SEES EARLY DIP BELOW FEBRUARY INTRADAY LOW (1015 EDT/1415 GMT)

Major U.S. stock indexes hovering around the unchanged mark on Monday after closing out a rough April, with investor focus on the Federal Reserve meeting this week where policymakers are widely expected to raise interest rates.

Of note, shortly after the open, the S&P 500 index dipped to 4,105.06, putting it below its February 24 intraday low of 4,114.65, and at its lowest level since May 19, 2021.

The benchmark index has since clawed its way back up to the 4,120 area, but is still red on the day.

Most major S&P 500 sectors are down with real estate the weakest group. Communication services leads gainers.

Meanwhile, the U.S 10-Year Treasury yield has hit 2.992%, which is a fresh high back to December 2018. This after the yield ended April above its 200-month moving average for the first time since March 1989, as well as a resistance line from September 1982.

Here is an early trade snapshot:

(Terence Gabriel)

DOW INDUSTRIALS: LOSING STREAK GETTING STRETCHED? (0900 EDT/1300 GMT)

The Dow Jones Industrial Average ended Friday down five-straight weeks, and just over 10% from its early-January record close. Thus, just as the Fed appears set to deliver a 50 bps rate-hike on Wednesday, the blue-chip average may be getting stretched to the downside:

The DJI last fell five-weeks in a row from early-February to early-March of this year. The DJI also fell five-straight weeks in June-July 2004.

The Dow has fallen more than five-straight weeks only four times over the past two decades. Those four streaks were all six weeks: April-May 2019, May-June 2011, August-October 2002, and May-June 2002.

Thus, over the past 20 years, it has been relatively rare for the DJI to decline 5-6 straight weeks.

Meanwhile, the Dow’s weekly RSI ended Friday at 32.79, or just above the 30.00 oversold threshold, as well as its 28.786 early-March trough. The March reading was the most oversold reading on a weekly basis since March 2020, which immediately led to a snapback of more than 7% over the next three weeks.

In terms of nearby DJI support, the 23.6% Fibonacci retracement of the entire March 2020-January 2022 advance is at 32,530.25. The late-February low was at 32,272.64.

Additionally, the rising 100-week moving average ended Friday at 32,254.81. The Dow has not registered a weekly close below this moving average since it was reclaimed on a weekly closing basis in July 2020.

(Terence Gabriel)

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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)