<p>Fairmont Equities founder Michael Gable appeared on Switzer TV this week with a prescient warning for investors. He says the S&P 500 is moving parabolically, and is now is hitting the top of its three-year run. He’s warning that a pullback is coming.</p>
<p>The US sharemarket has had a remarkable run. Despite wars and challenging economic numbers, the S&P 500 has climbed steeply since October 2022. It has not only recovered big losses but it has surpassed them by a significant margin. But for chart-based investors like Michael Gable, the shape of that recovery has become a concern.</p>
<p>The move, in technical analysis terms, has gone parabolic. And according to Gable, parabolic moves do not continue forever.</p>
<h3>What does parabolic actually mean?</h3>
<p>In Layman’s terms, a parabolic move is what happens when a market stops rising steadily and starts rising exponentially. The chart begins to look less like a gradual incline and more like a rocket trajectory. Historically, the pattern has appeared at major market tops like the Dot-com bubble in the late 1990s. </p>
<p>Gable used the term deliberately on the show, and his framing was concise: “Parabolic moves don’t continue on forever. And usually when they do end, we do see a bit of a sharp pullback.”</p>
<p>Gable’s call, made on Switzer TV this week, is that the S&P 500 is currently displaying exactly this pattern.</p>
<p>”As we’ve all seen, it’s just gone up vertically since those lows,” he told Peter Switzer. “Parabolic. Parabolic. You know, parabolic moves don’t continue on forever. And usually when they do end, we do see a bit of a sharp pullback.”</p>
<p>”I’ve had a look at the S&P 500 since we bottomed out in October 2022,” he said. “It’s generally followed a fairly nice channel. And if we draw a couple of lines where it has been trading, we will see that it is hitting the top end of that trading range. So it wouldn’t surprise me if we do get some weakness from here back into the range.”</p>
<p>The chart below shows the S&P 500 over the past twelve months.</p>
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<p>Gable was careful not to call this a crash in the catastrophic sense. His specific language was “weakness back into the range”. Or, a pullback to the lower boundary of the channel the index has been trading in since 2022, not a breakdown below it. A correction, not a collapse. It all depends on where it corrects back to.</p>
<p>”And then we’ll just have to take it from there,” Gable surmised.</p>
<h3>Watch the interview:</h3>
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<p><em>This article does not take into account the investment objectives, financial situation or particular needs of any individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances. Before acting on anything we discuss, we strongly recommend you seek the appropriate professional advice.</em></p>
