DOW down over 500 pts on debt ceiling and banking worries

Traders are growing increasingly cautious as US stocks open significantly lower today, with selloff gaining momentum throughout the early part of the session. At the time of writing, DOW is down by over -500 points. This decline appears to be a delayed response to Treasury Secretary Janet Yellen’s warning that the department “will be unable to continue to satisfy all of the government’s obligations” as early as June 1, unless Congress raises or suspends the debt limit beforehand. Yellen communicated this warning in a letter to House Speaker Kevin McCarthy. In addition, concerns surrounding regional banks persist, with major bank shares falling by more than -2.5%.

For now, DOW is still holding above near term structural support at 33233.85, which is close to 55 D EMA at 33351.58. The rise from 31429.82 is still intact for extending at a later stage through 34712.28 resistance. Nevertheless, break of 33233.85 will suggest that the corrective pattern from 34712.28 is extending with another falling leg before completion. Let’s see if the deciding move would happen before or after FOMC rate announcement tomorrow.