S&P 500: Are We Ready to Rally to 4800?
investing.comInflation, the Fed, interest rates, Russia/Ukraine war, Israeli/Hamas/Hezbollah war, Iran, China, North Korea, housing, earnings, oil, politics, bank instability, unemployment, US Dollar, etc.
Did I forget anything?
Well, I am quite sure there are other issues that many are focused upon which I did not enumerate. But, the point is that almost every single article written about the stock market focuses upon at least one of these issues as being of utmost importance to the next move in the stock market.
Now, take a step back, and ask yourself how many of these authors focusing upon all these factors have been able to accurately and consistently outline to you where the market is headed? Have you ever considered why they can't?
Well, the simple answer is that none of these factors drive the market, so they are looking in the wrong places for market directional cues. Let's look at some of the recent market studies that can explain why.
In a 1988 study conducted by Cutler, Poterba, and Summers entitled «What Moves Stock Prices,» they reviewed stock market price action after major economic or other type of news (including major political events) in order to develop a model through which one would be able to predict market moves RETROSPECTIVELY. Yes, you heard me right. They were not even at the stage yet of developing a prospective prediction model.
However, the study concluded that «macroeconomic news explains only about one-fifth of the movements in stock market prices.» In fact, they even noted that «many of the largest market movements in recent years have occurred on days when there were no major news events.» They also concluded that «there is a surprisingly small effect from big news of political developments and
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