Before you even think about looking at the chart below, remember what we said last week, when we commented upon what our futures-based model was projecting for the rest of the month.
That's also true for the projections for the remainder of March 2016, which suggest that stock prices are in for a rough ride before recovering. However, that apparent trajectory is really an artifact of the historic stock prices we use in our model to project their future trajectory, and as such, it is an echo of past volatility, which means that our model will be less accurate until that echo subsides....
So can we predict where stock prices are likely to go next?
Of course we can!... Provided investors keep their forward-looking focus on 2016-Q4 in making their current day investing decisions, we can expect that the S&P 500 will continue to track largely sideways (plus or minus 3% of their current value of just under 2000), through the end of March 2016.
Okay, *now* you can think about looking at the chart below!
So far, our impromptu forecast is holding, despite the best efforts of central banks around the world!
Speaking of which, here are the headlines that best describe what drove the market's actions in the second week of March 2016, along with our notes.
- 7 March 2016:
- Stocks Mixed as Wall Street Consolidates Recent Gains
- Fed's Fischer: US has "first stirrings" of inflation - is this the story of when inflation met Viagra?
- S&P 500 flat as energy spike offsets tech slide
- 8 March 2016:
- Wall St. lower as weak China data spooks investors - click here for a longer list of other things that spook investors. Honestly, if it weren't for the Scooby snacks, we don't know how we'd get them out of the Mystery Machine.
- Chevron plans to slash budget to save cash for dividend - if you ever wonder why stock prices have remained high even though earnings have crashed, here is the explanation: "Earnings don't drive stock prices. Dividends do."
- Fed Likely to Stand Pat on Rates, Keep Options Open for April or June - or December!...
- 9 March 2016:
- Markets betting on near-zero interest rates for another decade - well, aren't markets cheerful!
- Another up day for oil helps Wall Street extend its rally
- 10 March 2016:
- ECB pulls out stops with rate cut and stimulus package - Look up in the air! It's shock, it's awe, it's....
- Markets turn sour as Draghi signals end to rate cuts - ... a stimulus announcement that has been completely screwed up by the bozo who runs the ECB!
- Wall Street ends flat as Draghi action disappoints - it wasn't Draghi's action that disappoints, it was the clueless thing that he said afterward that did all the disappointing!
- Two experiments for the price of one - Scott Sumner on the market's reaction to the ECB's action and its none-too-bright leader's comments that wrecked the rally that could have been.
- ECB pays banks to take its money - once again, Futurama nailed the future. Watch as Fry plays the role of the ECB:
- 11 March 2016:
- Wall St. opens higher as oil rises - what can we say? Rising oil prices are good for oil and energy stocks!
- ECB Stimulus, firmer oil push S&P 500 to 2016 high - what does it say about what the market thinks of the leader of a central bank when they choose to look past the counterproductive things he says? Kind of like the media and Vice President Joe Biden.
- S&P 500, U.S. crude prices end at 2016 highs - which isn't saying much, since it was higher in 2015.
On a programming note, we'll next update our S&P 500 At Your Fingertips tool sometime next week - we're being slammed by other projects right now, where even though the BLS will be releasing its February CPI figures on 16 March 2016, we won't be able to get to it until sometime during the weekend at the earliest.