Unexpectedly Intriguing!
January 25, 2021

The S&P 500 (Index: SPX) popped to new highs in the third week of January 2021, before tailing off on Friday, 22 January 2021 to close 11.60 points below its new high mark of 3,853.07.

The news that caused the new record high came from Netflix (NASDAQ: NFLX). The company reported outstanding quarterly results and announced they had surpassed over 200 million subscribers. More significantly, with so many paying customers, the firm announced it will no longer need to borrow to finance its development of new programming. That change will boost the company's profitability going forward, with the news sending its stock price 10.6% higher because of the associated change in its future expectations. The company's market capitalization likewise surged to 0.8% of the entire value of the S&P 500, contributing a significant portion of the index' gains during the week.

Here is the latest update to the alternative futures chart.

Alternative Futures - S&P 500 – 2021Q1 - Standard Model (m=+1.5 from 22 September 2020) - Snapshot on 22 Jan 2021

We think investors are still mostly focusing on 2021-Q2 as they set current day stock prices, although it's possible they may have shifted some their focus toward a more distant time horizon in conjunction with Netflix' change in future expectations. We'll find out over the next two weeks how things settle out for the S&P 500, where the onset of new information will set the tune to which index dances.

Speaking of which, here are the past week's more notable market-moving headlines.

Tuesday, 19 January 2021
Wednesday, 20 January 2021
Thursday, 21 January 2021
Friday, 22 January 2021

Elsewhere, Barry Ritholtz outlines the positives and negatives he found in the markets and economics news of the market holiday-shortened week that was!


Update 27 January 2021 9:56 PM Eastern: Things settled out in the markets more quickly than we anticipated. According to the dividend futures-based model, today's 2.6% drop in the value of the S&P 500 directly coincides with what would be expected if investors had previously set their forward looking focus on 2021-Q4, then suddenly refocused it on the much nearer term of 2021-Q2. Here's what that looks like on a mid-week update to our alternative futures spaghetti forecast chart:

Alternative Futures - S&P 500 – 2021Q1 - Standard Model (m=+1.5 from 22 September 2020) - Snapshot on 27 Jan 2021

According to the news, it was the worst day for stock prices since October 2020. From our perspective, had investors reset their investment horizons on 2021-Q1 instead of 2021-Q2, the S&P 500 could have fallen another 5%, which would be a more impressive Lévy flight event than the relatively small one we saw today.

But what new information might compel investors to become so myopic?

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

JavaScript

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
Shopping Guides
Recommended Reading
Recently Shopped

Seeking Alpha Certified

Archives
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.