The S&P 500 slumped 0.7% in midday trading, but has bounced back above expected support at the 50-day moving average (DMA) after a brief dip below the widely watched chart levels earlier in the session. Many see the 50-DMA as a guide to the short- to intermediate-term trend, so a close below the line could portend further weakness. The S&P 500 was down as much as 1.6% at its intraday low of 4,061.41 before recovering, while the 50-DMA currently extends to 4,080.56, according to FactSet. Janney technical analyst Dan Wantrobski said he’ll be watching how the S&P 500 closes around support at the 50-DMA “for clues that a bigger correction is in the making.” It might take more than one close below the 50-DMA to warn of further losses. The S&P 500 as closed below the 50-DMA twice in 2021, on Jan. 29 and March 4. The index rallied back above the line the days after, surging 1.6% on Feb. 1 and running up 2.0% on March 5. Janney’s Wantrobski warns that the next break might be different. “We reiterate our call for volatility over the short-run, where we believe the S&P remains vulnerable to a bigger correction that it has seen thus far this year,” he wrote in a note to clients.
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