At the end of the last week of January 2016, stock prices rallied on the news that the Bank of Japan would implement negative interest rates in that country and that the Fed was likely to back off its plans to hike interest rates again before the end of 2016-Q1.

In the first week of February 2016, investors started the week still focuses on 2016-Q3, but quickly shifted their attention back toward the near term, holding it on 2016-Q2 through the end of the week, which is why stock prices fell on Tuesday, 1 February 2016, was largely flat through Thursday, 4 February 2016, and then fell again on Friday, 5 February 2016, as investors ended the week splitting their focus between 2016-Q1 and 2016-Q2.

Click here to see what this chart looked like last week. Here are the main news events that drove the outcome we see in the chart above.

• 1 February 2016: On a day with little other news to affect their forward-looking focus, investors maintained their focus on 2016-Q3, following the news during the weekend that the Fed's vice chairman Stanley Fischer had indicated that the Fed was concerned about market volatility resulting from the global economic slowdown.
• 2 February 2016: Investors were compelled to shift their attention toward the nearer term, specifically to 2016-Q2, as the third largest company in the S&P 500, ExxonMobil (NYSE: XOM), reported that its profits had tumbled by 58%, and that it would slash its planned capital expenditures by 25%, signalling that even the largest firms in the U.S. energy sector would not escape being negatively affected by the oil industry's ongoing distress. At the same time, other firms indicated that they were also likely to cut back on their capital investments, suggesting that they also expected weaker growth ahead.
• 3 February 2016: The day started strong, as New York Fed president Bill Dudley emphasized his concerns that the strong U.S. dollar would lead to "significant consequences", leading investors to once again shift their focus toward 2016-Q3 again as the statement suggested he would not support another rate hike before that time. Trading during the day was volatile however, and the market ended up by a small margin to close the day as oil prices appeared to firm up.
• 4 February 2016: Stocks prices rose along with commodities as the U.S. dollar weakened. However, the upside potential of that news was muted as U.S. investors resumed their focus on the near term as Cleveland Fed president Loretta Mester offered her comments suggesting that she still thinks the Fed should jack U.S. interest rates higher, as she believes the U.S. economy's poor performance in recent months is just a short term "soft patch".
• 5 February 2016: A "good" employment situation report for January 2016 opens the door to the Fed continuing its planned interest rate hikes, which leads investors to pull their forward-looking attention even closer to the near term, causing stock prices to fall in response.

Let's discuss some of the dynamics that were at work in the market during the week. First, the fall of stock prices on Tuesday, 2 February 2016 in response to ExxonMobil's earnings news.

Here, the worsening of the expected outlook for U.S. oil producers caused investors to focus more on the nearer term because of the impact that change would have on that industry and because of the timing of when that impact would be felt. As it happened, the oil companies that reported earnings in the first week of February 2016 consistently indicated that they were also cutting back on their planned capital investments, indicating that they see little prospects for growth ahead, and one, ConocoPhillips (NYSE: COP), went so far to cut its dividend too.

At the beginning of this article, we stated that as of Friday, 5 February 2016, investors were splitting their forward-looking attention between 2016-Q1 and 2016-Q2, although if you look closely at our chart, it would appear that investors were tightly focusing their attention to 2016-Q2.

The only reason it appears that way is due to our use of historic stock prices as the base reference points from which we project the alternative trajectories of future stock prices, where the echoes of the market's activity from 13 months ago, 12 months ago and 1 month ago contribute to our projections. In this case, the echoes of that past volatility makes it appear that investors are closely focused on 2016-Q2 in our model, rather than splitting their focus between 2016-Q1 and 2016-Q2. (The quick and easy way to confirm that assessment is to simply connect the dots for each of the alternative trajectories on each side of the volatility indicated by the short term echo event.)

Finally, on an upcoming programming note, we plan to follow up our post last week where we sought feedback from readers on Seeking Alpha on how to exploit the kind of information our futures-based model can provide later this week.

Previously on Political Calculations

• One Week into 2016 with the S&P 500
• The S&P 500 in Week 2 of January 2016
• The S&P 500's Wild Ride in Week 3 of January 2016
• Exploiting the Future for the S&P 500 in Week 4 of 2016