Closing Out June for the S&P 500

Assuming something really wacky doesn't happen on 30 June 2009, we would expect the S&P 500 will turn in an average value for the month somewhere close to the range between 926 and 944.

That's not a bold statement, given that the current average for the month through 24 June 2009 stands at 927.16, but we do anticipate that most of the downward noisy volatility in stock prices associated with the quadruple witching expiration of options last week is largely over and that, absent any disruptive events, we should expect stock prices to slowly rise from their 900.21 closing value recorded on 24 June 2009.

We base that outlook on our math using the following observations:

• Investors appear to be focused on the level of trailing year dividends per share that will apply for the end of 2009, or rather, the dividend futures data for the first quarter of 2010 (the dividend futures contract for 2009Q4 expires on 20 December 2009 - the dividend futures contract for 2010Q1 will be the one in effect when New Year's Eve rolls around.) The changes in the expected rate of growth of dividends per share at this time, multiplied by an amplification factor ranging between 7.0 and 9.0, continues to appear to be the primary signal driving overall changes in stock prices.
  
  
• The base from which stock prices are being measured appears to be the average of the S&P 500's daily closing prices established for the month of June 2008, 1341.25.
  
  
• The annualized rate of change of stock prices from May 2008 through May 2009 of -35.7%.
  

Happy investing!