Unexpectedly Intriguing!
December 18, 2014

Barry Ritholtz has a fine rant:

Those of you who continue to insist you can even remotely forecast what might happen next continue to reveal incredibly foolish, thoroughly disproved beliefs, despite an overwhelming avalanche of evidence that you haven’t the slightest idea what the fuck is going on now, much less what is going to happen next.

Once again, the markets prove that nobody knows ‘nuthin.

Carry on.

Okay. Here is the chart we posted before the market opened on Tuesday, 16 December 2014:

Alternative Futures for S&P 500 - Standard Model - 2014Q4 - Snapshot on 15 December 2014

Here is what the updated version of that chart looks like as of the market close on 17 December 2014:

Alternative Futures for S&P 500 - Standard Model - 2014Q4 - Snapshot on 17 December 2014

We do this sort of thing routinely. So much so that we don't even bother calling attention to it any more unless it is to point out an obvious gap in someone's understanding of what is possible.

Then again, it's not like we're going to be doing much of that beyond next week, as we'll no longer be routinely posting such things after that time!

Until then, welcome back to the cutting edge of what is possible today!

Update 18 December 2014: How about another go, seeing as Barry was really going on about the impossibility of predicting what the stock price futures were indicating would be happening with stock prices this morning? Here's what our stock price forecast chart looks like after the close of trading on 18 December 2014:

Alternative Futures for S&P 500 - Standard Model - 2014Q4 - Snapshot on 18 December 2014

Here's the text from the chart:

Converging Back to 2015-Q2 Following the Fed

Following the Fed's announcement and Janet Yellen's press conference on Wednesday, 17 December 2014, it would appear that the Federal Reserve has succeeded in directing the collective attention of investors to 2015-Q2, which is when it will most likely begin to hike short term interest rates. Consequently, stock prices have rocketed up during the last two days as they converge with the trajectory defined by an investor focus on that future quarter in setting today's stock prices, which is exactly how our model of how stock prices behave says they would behave under those circumstances. Very forecastable, Barry Ritholtz!

After a certain point, doing this sort of thing is a lot like shooting fish in a barrel, because what we're doing is much more science than art - it works because it's simply applied physics with direct parallels to the laws of motion. Which is why we're moving on to other challenges that might also benefit from that kind of approach.

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