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!)

Labels: ,

About Political Calculations

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

Thanks in advance!

Recent Posts

Stock Charts and News

Most Popular Posts
Quick Index

Site Data

This site is primarily powered by:

This page is powered by Blogger. Isn't yours?

CSS Validation

Valid CSS!

RSS Site Feed

AddThis Feed Button


The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.

Other Cool Resources

Blog Roll

Market Links

Useful Election Data
Charities We Support
Recommended Reading
Recently Shopped

Seeking Alpha Certified

Legal Disclaimer

Materials on this website are published by Political Calculations to provide visitors with free information and insights regarding the incentives created by the laws and policies described. However, this website is not designed for the purpose of providing legal, medical or financial advice to individuals. Visitors should not rely upon information on this website as a substitute for personal legal, medical or financial advice. While we make every effort to provide accurate website information, laws can change and inaccuracies happen despite our best efforts. If you have an individual problem, you should seek advice from a licensed professional in your state, i.e., by a competent authority with specialized knowledge who can apply it to the particular circumstances of your case.