Unexpectedly Intriguing!
July 5, 2016

The fifth week of June 2016 had another Lévy flight event for the S&P 500, following very quickly after the Brexit-driven event of Week 4, only now in the opposite direction from what we saw last week.

In the animated image below, we're showing the trajectory of the S&P 500 in the period from 7 April 2016 through 1 July 2016 with respect to the alternate levels our futures-based model would project for the index based upon the historic value of stock prices and the expectations for dividends in future quarters. If you're reading this article on a site that republishes our RSS news feed and the animation doesn't play, you may want to click through to our site to see the original animation or to YouTube where we've posted a video version. For it to play, regardless of where you view it, you will need to use a modern web browser with JavaScript enabled.

Alternative Futures - S&P 500 - 2016Q2 - Standard Model - Animation: 7 April 2016 through 1 July 2016

What you're seeing in the animation in the period from 23 June 2016 through 1 July 2016 is the result of investors shifting their forward-looking time horizon for their current day investing decisions, first from the distant future of 2017-Q1 back to the nearer term future of 2016-Q3 and then out again to the distant future of 2017-Q1. The actual trajectory of the S&P 500 adapted accordingly with respect to where the expectations for the change in the year-over-year growth rate of dividends at those different points of time would set them.

If the United Kingdom's referendum on whether to remain or exit from the European Union had a different outcome, it is highly unlikely that the S&P 500 would have followed the trajectory it did during this period. Following the Brexit vote, the increase in uncertainty with respect to the economic and financial impact of British voters to leave the E.U. is what prompted investors to draw in their forward-looking focus from the distant future, which is consistent with how investors behave during such disruptive events.

The response of the world's central banks, which was characterized by statements indicating greater easing of monetary policy, then succeeded in refocusing investors back out to the farther future during the week.

Speaking of which, here are the more significant headlines we flagged during Week 5 of June 2016, along with our contemporary notes.

Monday, 27 June 2016
Tuesday, 28 June 2016
Wednesday, 29 June 2016
Thursday, 30 June 2016
Friday, 1 July 2016

That's all for the S&P 500 in Week 5 of June 2016. As a heads up, we may be breaking news tomorrow, assuming that nobody else picks up on what looks like might be the biggest story of the previous week before we post it (so you can't say that we're not giving the mainstream financial media or even non-mainstream news sources a sporting chance - we would be happy to have them beat us to it!)

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