Two months ago, the S&P 500 (Index: SPX) was rising so quickly it raised the prospect the index could see a break down in the relative period of order the index established since the end of 2023.
Instead, after peaking on 2 June 2026, the S&P 500 has reverted toward its established mean trajectory. Through the end of July 2026, the index is hovering right around that 31-month-old central trend curve.
Which is to say the index remains well within its established relative period of order after having regressed toward its mean trend trajectory. Whatever bubble might have been forming within the index has mostly deflated.
The following chart visualizes the relationship between the value of the S&P 500 and its underlying trailing year dividends per share from 29 December 2023 through 31 July 2026:
Previously on Political Calculations
- How Big is the AI Bubble and Is It Really a Bubble?
- The Definition of a Bubble
- The Ultimate Sell Signal
- What Caused the Dot Com Bubble to Begin and What Caused It to End?
- The Black Monday Stock Market Crash Explained
- Not Necessarily Wrong But Useful
Image Credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Wall Street bull and bear looking at a balloon labeled 'AI BUBBLE?' that has deflated".