Appears like a “double prime” within the S&P 500, warns investor Mark Mobius
Mark Mobius, CEO of Templeton Emerging Markets Group, speaks during the Skybridge Alternatives (SALT) conference in Las Vegas, Nevada, USA, on Wednesday, May 17, 2017.
Paul Morris | Bloomberg via Getty Images
The S&P 500 is a “double top” in the US election, which is a worrying sign for investors, according to Mark Mobius, a seasoned investor.
A double top is a bearish technical indicator where the price of an asset hits two consecutive highs and only sees a moderate decline between the two highs. Then if the price drops below the support level reached during the intermittent low, a double top is confirmed.
The S&P hit a record high of over 3,580 points on September 2, limiting a recovery in stock markets after the March crash when the coronavirus pandemic spread across the US and Europe.
After the S&P 500 posted a sharp decline triggered by a sell-off of the tech megastocks that drove the rebound, it rose again to 3,534 points in mid-October. At the close of trading on Monday, the index was just over 3,400 and has risen by more than 5% since the beginning of the year.
Mobius, founding partner of Mobius Capital Partners, told CNBC’s “Squawk Box Europe” on Tuesday that the US elections next Tuesday would have “a major impact on the markets”.
“It’s interesting when you’re a technician, you look at the S&P 500 and it looks like a double lid is forming which is pretty dangerous. I think people aren’t just concerned about who will win, but also whether it is possible. ” to be a hanging choice, “said Mobius.
Should the result run short in the days after the election as states count an unprecedented deluge of postal ballot papers, current President Donald Trump has announced that he would try to contest the result if Democratic challenger Joe Biden wins. Analysts broadly believe that prolonged political uncertainty should the election result land in court, disrupting global markets.
“I think a lot of investors, not just in the US but around the world, are watching this very, very closely, knowing that a downturn in the US market will affect everyone,” said Mobius.
Mobius also suggested that if Joe Biden wins, US and global markets will suffer, but only in the short term as investors wait to see what policies Biden follows.
“If he decides not to raise taxes, that would be good for the markets. So we have to see what the real action is when he takes office when he takes office.”