It would initially appear that our technique for filtering out the echoes of the past in sorting out what's really going on with today's stock prices is effective. We'll let our charts do most of the talking today, so if you want more detailed analysis, mind the notes in the margins.
Our first chart shows the change in the year-over-year growth rate of S&P 500 stock prices against the framework of the underlying change in the year-over-year growth rate of trailing year dividends per share that investors currently expect in the future (at least as they saw it through last Friday, 29 November 2013!):
Our second chart redraws the change in the annualized growth rate of daily S&P 500 stock prices and their 20-day moving average using our selected base reference period from 10 months earlier. The red bracket marks the difference between the year-over-year data and the annualized 10-month base period:
Our third and final chart indicates what the change in the year-over-year growth rate of S&P 500 stock prices would be in the absence of the echo effect:
At present, it would seem then that the S&P 500 is running to the hot side of where our dividend futures-based model would set its value. In the absence of a new noise event, we would therefore expect to see stock prices cool off a bit in the near term to return to the levels that would be supported by the expectations of investors focused on 2014-Q1 in setting today's stock prices.