Unexpectedly Intriguing!
09 December 2009

Crystal Ball Earth We have ourselves a cage match in the stock market today! CNN reports that U.S. markets are "poised for a rebound Wednesday", and the Associated Press reports this morning that "stock futures rise after sell-off as dollar falls."

But, today's dividend futures data for the S&P 500 indicates that we should expect stock prices to fall.

Seeing as we turned out to be right last Thursday, when stock prices rose (even though the value of the U.S. dollar rose as well,) we'll go with what the dividend futures are telling us as our market prediction for the day.

A couple of other notes on last Thursday's prediction. That rise in stock prices occurred even as commodity prices and many of their related stocks fell, suggesting that dividend futures provide a stronger signal for stock prices to follow than the changing value of the U.S. dollar, which we consider to be a component of noise in the market. We also correctly anticipated in our morning update to that post that the market's reaction to the better-than-expected jobs report of that day would be short-lived. The spike from that good news appears to have only lasted until about noon that day!

Over the weekend, we'll note that the dividend futures fell below where they had been before we noted their jump in value, but the market didn't appear to absorb that information until Tuesday, December 8. If the noise from the falling dollar is strong enough today to counteract the change we observe in dividend futures, we might see a similar delayed reaction.

Like we said at the beginning, it's a cage match!

Update 6:32 PM EST: Dividend futures won the kickoff and held the lead for most of the day, but ultimately, new noise broke out late in the day, replacing the original team and carried the day!


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