S&P 500 Completes Fourth Lévy Flight Event of 2018

2018 has been a big year for outsized stock price movements in the S&P 500 (Index: SPX)! It was just earlier this week that we marked the end of the index’ third Lévy flight event in 2018, which had begun when investors suddenly shifted their forward-looking focus away from the future quarter of 2019-Q1 toward the more distant-future quarter of 2019-Q3. And now, in just the span of seven trading days, investors appear to have fully returned their attention to 2019-Q1, with the market’s post-midterm election reaction marking the end of a fourth Lévy flight for the S&P 500 in 2018.

With the end of that new Lévy flight, we can now draw a new redzone forecast to project where the S&P 500 will go over the next month, where we assume that investors will sustain their focus on the near-term future of 2019-Q1 and the expectations for dividends associated with it from 7 November 2018 through 7 December 2018, which you can see in the latest update to our alternative futures spaghetti forecast chart.

Given the volatile nature of the stock market in 2018, it’s possible that investors may shift their attention once again back toward 2019-Q3 (or 2019-Q4) and send stock prices falling again, or alternatively, to 2018-Q4 or 2019-Q2, either of which would coincide with a strong rally in the stock market, so that will be something to watch out for during the next month. If we’re right regarding the future trajectory for the S&P 500 however, we won’t see much in the way of interesting behavior during the next 30 calendar days, where we define “interesting” as being when the S&P changes in value by more than two percent from one trading day’s closing value to the next.

We’ll catch up with the market-moving news headlines in our regular Monday update to our ongoing S&P 500 Chaos series of stock price analysis. Until then, if you want to find out more about our prediction accuracy whenever we’ve presented a red-zone forecast for the S&P 500, please see our track record tally from March 2018 and, just for fun, also check out where we predicted where the floor would be for the S&P 500′s third Lévy flight event of 2018 compared with where the index actually went during the time it ran. If any of that intrigues you, here’s a discussion of how we’re able to do it.