- Summary:
- The S&P 500 index resumes the decline today after the tech index sells off, but can a Trump victory save the day for the index on US elections day?
The S&P 500 index has resumed the decline, as the selloff in tech stocks continues. Underwhelming business updates from several tech stocks that markets feel do not match their hefty valuations and price gains of 2020 are pushing investors to take profits from those stocks, even as the coronavirus pandemic continues to rock the US. The Technology Index is the biggest loser of all 11 major S&P 500 sectors at the time of writing, with Apple, Amazon, Twitter shares are down 5.41%, 3.92% and 20%, respectively.
An estimated 90,000 new cases of coronavirus infections are said to be occurring daily in the US. The much-anticipated stimulus deal was not passed this week, leaving the US markets at the mercy of the outcome of the US elections. This could be the next major trigger for price action. Investors remain cautious ahead of Tuesday’s primary in-person voting process, with nearly 60 million votes already cast in early voting.
The S&P 500 index is down 1.77% and looks set to end the week sharply lower.
Technical Outlook for S&P 500
The outlook provided yesterday remains basically unchanged. However, the influence of the US election now has to be factored into the projected price movement for next week. Joe Biden has threatened higher taxes, which could threaten new foreign investment inflow into the US economy in a pandemic era. A Biden election victory may be perceived as a market-negative event, and the bearish outlook provided yesterday may play out. This outlook sees the progressively lower peaks on the price (2 September all-time high and 12 October high) and the RSI momentum as double tops. The pattern catalyzes a significant move south if the neckline that cuts across the 24 September trough is breached in a downward direction.
A victory for Trump may be a vote of confidence for the policies that led to the fantastic pre-pandemic market surges. This view could support a bounce at the neckline of 3228.4, which allows an upswing that targets 3282.2, 3335.5 and possibly 3393.5, in that order, as price aims to re-establish the run towards new highs.
S&P 500 Daily Chart
