Unexpectedly Intriguing!
August 17, 2020

The S&P 500 (Index: SPX) crept up ever closer toward new record high territory, closing within six points the current record of 3,386.15 on Wednesday before dipping to close the week at 3,372.85.

From our perspective, the most remarkable thing about that figure is that its right in the middle of the redzone forecast range on the alternative futures chart.

Alternative Futures - S&P 500 - 2020Q3 - Standard Model (m=-0.5 from 14 July 2020) - Snapshot on 14 Aug 2020

That trajectory is consistent with the assumptions that investors are largely focusing on 2020-Q4 in setting current day stock prices and that they anticipate the Federal Reserve will maintain an expansionary monetary policy for the indefinate future. We periodically add redzone forecasts to the standard projections of the dividend futures-based model behind the alternative futures chart to compensate when they are affected by the echoes of past volatility, which arises because of the model's use of historic stock prices in its projections.

That said, the S&P 500 is largely tracking along with the latest redzone forecast we've added because the flow of new information hasn't prompted investors to alter their expectations or to shift their forward-looking focus. Confirmation of that assessment can be found in the week's major market-moving headlines, such as we tagged them during the week that was:

Monday, 10 August 2020
Tuesday, 11 August 2020
Wednesday, 12 August 2020
Thursday, 13 August 2020
Friday, 14 August 2020

Meanwhile, Barry Ritholtz' latest list of positives and negatives that he found in the week's economics and markets news is posted over at The Big Picture.

We'll see if this next week finally sees the S&P 500 close at a new record high!



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