Unexpectedly Intriguing!
December 21, 2020

Friday, 18 December 2020 was a quadruple witching day on Wall Street, as stock index futures, stock index options, stock options, and single stock futures for 2020-Q4 all expired simultaneously. It may not feel like it quite yet, but for all practical purposes, where the markets are concerned, we are now in the first quarter of 2021!

That change of financial calendar also applies for dividend futures, which saw quite a lot of noisy activity before the quad witching day's trading ended. We've learned from experience that it takes several days for the end-of-quarter noise to subside and a clear signal for the future of dividends to emerge, which is where we're at today. That signal however won't have emerged before we sign off for 2020 ourselves and go on holiday, as our annual tradition of celebrating the biggest math story of 2020 will go live sometime late on Wednesday, 23 December 2020.

Until we return in 2021, we can confirm that investors have remained focused on the future quarter of 2021-Q2 during December 2020's week of four witches, following their having shifted their forward-looking focus to that distant future quarter on 11 December 2020. The latest update for the alternative futures chart for 2020-Q4 shows the dividend futures-based model's projections for the S&P 500 (Index: SPX) through the rest of the 2020 calendar year.

Alternative Futures - S&P 500 - 2020Q4 - Standard Model (m=+1.5 from 22 September 2020) - Snapshot on 18 Dec 2020

The market-moving news headlines we've pulled from the newsflow of the week that was is deceptively light, where perhaps the biggest news of the week was the announcement of the Fed's plans to provide quantitative easing-like monetary support for the indefinite future. Meanwhile, the Fed's minions appear to be working hard to convince the markets that the Fed won't be doing much more to boost the economy anytime soon.

Monday, 14 December 2020
Tuesday, 15 December 2020
Wednesday, 16 December 2020
Thursday, 17 December 2020
Friday, 18 December 2020

If you're looking for a bigger picture of the news of the week, Barry Ritholtz has you covered with his weekly review of the positives and negatives he found in the week's economics and markets news over at The Big Picture.

The week ahead should see a fiscal spending deal come out of the U.S. Congress, which we don't think will do much to reset the forward time horizon of investors.

The next edition of our S&P 500 chaos series will arrive early on Monday, 4 January 2020, when we'll also recap the more significant news headlines from the two previous, holiday-shortened trading weeks. Thank you for joining us for our analysis in 2020, we look forward to continuing to project the future for the S&P 500 in 2021.

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