In 2012, after Spain's government had run up an extraordinary budget deficit in the previous year, the newly elected government of Spain's new prime minister, Mariano Rajoy, committed to both increase the government's revenue and to decrease its spending to put Spain on a more sound financial footing. Those changes had been demanded by the European Central Bank as a requirement for its continuing to lend money to bail out Spain's fiscally distressed government, which had been put at risk by its bailout of that nation's banks following the collapse of the Spanish housing bubble.

To help put Spain's fiscal situation going into 2012 into context, we're presenting an updated version of the chart we first featured nearly a year ago when we first examined how Spain arrived at that state. The chart shows the relationship between Spain's GDP per capita and its annual government tax

And then, suddenly, the future for the S&P 500 (SPY) snapped into clear focus:

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It would appear that investors have shifted their forward-looking focus to 2014-Q1 in setting the pace of change for U.S. stock prices. Following the period after the fiscal cliff reaction of 15 November through 20 December 2012, they had been focused mainly on 2013-Q2.

Now that the transition in focus from 2013-Q2 to 2014-Q1 seems assured, we can expect the recent rapid run-up of stock prices to taper off, as the change in the growth rate of stock prices will converge with that expected for the S&P 500's dividends per share in 2014-Q1. Since that pace is positive, we can expect stock prices to continue generally rising, although at a slower pace.

However, anything that might shift the focus of investors to the less distant future quarters of 2013-Q3 or Q4 will send

When should you sell your stocks?

We asked that specific question several weeks ago, before we exploited the fractal nature of stock prices in developing an objective statistics-based method for determining when to tell if an upward microtrend for stocks was about to break.

We then tracked stock prices closely using that method, as it didn't take long before the recent upward microtrend we were tracking would appear to have broken, as stock prices suddenly dropped below the statistically-expected, or "normal", target range:

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But then, one day earlier, we said that maybe that isn't such a good signal to follow in deciding to pull the trigger for selling stocks, explaining the technical reasons why, and then suggesting a more "conservative approach" for deciding when to actually sell:

We should also recognize that since we're using both a power law-based regression analysis and a statistics-based

Going into this week, we're not much closer to knowing for sure if the stock market's climb from its last notable trough on 18 April 2013 is the result of noise, a fundamental shift in investor focus, or the Fed's recent indication that it might really amp up its current quantitative easing program as we have previously speculated it might.

But regardless, even if stock prices stay flat, this will be a big week for the S&P 500, because this is the week that three of the largest companies that compose the market-cap weighted index will be determining who owns their stock for the purpose of paying out dividends for 2013-Q2!

(click to enlarge) In fact, two of those three companies will be noting their shareholders of record today (Monday, 13 May 2013): Exxon Mobil (NYSE: XOM) and Apple (Nasdaq: AAPL). They

As expected, following the end of a record-breaking four-month long period in which publicly-traded U.S. companies incented by the fiscal cliff crisis set all-time records for the number of dividend increases, cuts and special (or extra) dividends paid, April 2013 was somewhat boring by comparison.

The recent rally in stock prices, beginning after 15 November 2012, is a direct result of the reaction of these companies' reaction to the fiscal cliff crisis. All in all, there were some 2,946 declarations made by the approximately 3,687 publicly-traded companies in the United States announcing some sort of action related to their companies' dividend policies. Of these, 36 involved companies paying an extra, or special dividend payment to their shareholders and 203 involved dividend increases. These figures are well below the all-time record levels of 483 extra dividends announced in the month of December 2012 and the 298 dividend increases

Over the past several weeks, we've identified three potential wild cards that could affect stock prices in a positive way in the margin of our favorite chart:

• The Fed could amp up its latest QE program.
• Investors might shift their focus to 2014-Q1 in setting stock prices.
• "Noise" events.

In just the last week, we've seen evidence that all three of these wild card factors may be coming into play. Let's take them on in reverse order:

What we call a "noise event" is the stock market's response to speculative factors, which are most often associated with new information becoming known to investors. Things like jobs reports, economic data releases, and even political events are all things that can and do affect stock prices on top of the signal sent by the main driver of stock prices: the sustainable portion of expected future earnings (a.k.a. dividends). Noise is

As expected, the first estimate of GDP for the first quarter of 2013 came in above the midpoint of our target forecast range, with the Bureau of Economic Analysis reporting that the aggregate national income of the United States was $13,750.1 billion in terms of constant 2005 U.S. dollars.

The midpoint of our official target range for GDP in 2013-Q1 was $13,724.5 billion in terms of constant 2005 U.S. dollars, about 0.19% below the BEA's initial estimate.

So where might we reasonably project GDP for the current quarter (2013-Q2) to be when it is first reported three months from now?

The chart below shows what our inertia-based "modified limo" forecasting technique anticipates it will be [click to enlarge]:

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Using the initial estimate for real GDP in 2013Q1, we can provide the following preliminary odds for 2013Q2 - all GDP figures are given

What is the market capitalization of the U.S. new home market?

To find out, we first took the U.S. Census Bureau's seasonally-adjusted estimate of the number of new home sales for each month from January 2012 through March 2013:

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Then we multiplied those seasonally-adjusted values by the average new home sale price recorded by the Census Bureau for each of these months:

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That allows us to arrive at the new home market's equivalent of the stock market's market capitalization!

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We selected the period from January 2012 through March 2013 so we could focus on the new inflating bubble taking hold in the U.S. housing market. Here are some quick takeaways from what we see in the charts:

• Initially, it only took an additional 1,400-1,500 new home sales each month to launch the bubble.
• After holding steady for several

After we had first announced that a new housing bubble had taken root in the U.S. economy beginning in July 2012, we soon followed up with additional analysis that suggested that it had perhaps begun to decelerate to a more sustainable level after December 2012. Recently revised data from the U.S. Census Bureau for the median sale prices of new homes in the United States through March 2013 now confirms that there has been no slowdown in the rapid inflation of new home sale prices observed since July 2012.

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Since 1967, there is only one period of rapid price escalation that even comes close to matching the current trend for median new home prices in the United States: the initial inflation phase of the first U.S. housing bubble, which ran from November 2001 through September 2005 - approximately the time at which the Federal

There are 10 companies that make up over 18% of the value of the market capitalization-weighted S&P 500 stock market index:

• Exxon Mobil (NYSE: XOM): 2.78%
• Apple (Nasdaq: AAPL): 2.70%
• Microsoft (NYSE: MSFT): 1.70%
• Johnson & Johnson (NYSE: JNJ): 1.68%
• Chevron (NYSE: CVX): 1.62%
• General Electric (NYSE: GE): 1.61%
• Pfizer (NYSE: PFE): 1.53%
• Google (Nasdaq: GOOG): 1.52%
• Procter & Gamble (NYSE: PG): 1.48%
• AT&T (NYSE: T): 1.44%

In the last two weeks, 5 of these companies, whose combined market capitalization makes up over 10% of the value of the S&P 500 index, have boosted their dividends:

• Exxon Mobil: Up 11% to $0.63 per share, payable to shareholders of record on 13 May 2013, to be paid on 10 June 2013.
• Apple: Up 15% to $3.05 per share, payable to shareholders of record on 13 May 2013, to be paid on 16 May 2013.
• Johnson & Johnson

What a weird day for the stock market. And the weirdness started early. Pragmatic Capitalism's Cullen Roche sets the scene:

Here's a brief rundown of some of the data we saw in the last 12 hours:

-U.S. Flash PMI came in at 52, weaker than expected and down from 54.6 last month.

-German Flash PMI hit a six-month low of 48.8.

-China PMI hit a two-month low of 50.5, down from 51.6 last month.

-Richmond Fed Manufacturing came in at -6 vs. expectations of a +3 reading.

-Redbook sales were up just 1.8%, down from 2% last week.

-New home sales came in at 417K, below estimates of 419K, but up from last month's 411K.

So, not a great day for data. And yet the equity markets in Europe were up 1-3% and the S&P is up over 1%. No one I've talked to can make a whole lot

Last Friday, we declared that order had indeed broken down for the S&P 500, marking the end of the most recent rally for the U.S. stock market. But is the rally really over? Well, we can't say that just quite yet, as it happens. To understand why we would appear to be contradicting ourselves, let's take a step back and consider just how we've arrived at this point!

It all started when we decided to address a specific challenge back on 5 April 2013. We had indicated a week earlier that a 150-point plunge in the value of the S&P 500 would be a "clear sell signal," but we wondered if we could come up with an objective approach that might minimize the downside risk of holding onto stocks too long after they've begun to turn south, while also not missing out on any potential gains that would

After having a bad day on 15 April 2013, the stock market had a good day on 16 April 2013, as everything looked up. Wall St. Cheat Sheet's John Nyaradi captured the mood:

Among Tuesday’s three upbeat economic reports was the Federal Reserve revelation that industrial production rose by twice as much as expected.

Economists were expecting the U.S. Federal Reserve to report that industrial production increased by 0.2 percent in March. Investors were excited to see that industrial production actually increased by 0.4 percent. The reports on March housing starts and the Consumer Price Index were also better than expected.

Beyond that even, all the big earnings news of 16 April 2013 was good:

Now that earnings season is in full swing, investors are rightfully focusing the majority of their attention on what really matters: earnings reports. A number of the biggest companies reported today, and

The 15th of April in 2013 was a bad day on many different levels. It was one of those days that started that way, then only got worse.

Let's focus on the stock market. Here's the chart that we know many of you are waiting to see:

(Click to enlarge)

On 15 April 2013, the S&P 500 fell 36.49 points to close at a value 1552.36, as our interpolated trailing year dividends per share figure for the day reached $32.31. That's a little over 11 points higher that the value of 1541 that would coincide with our statistically "not necessarily wrong, but useful" sell signal, which would be triggered if the S&P 500 closed at a value below that level.

The market did not close below that level, so an investor who might be using our newly developed method to help decide when to sell would

From all appearances, the U.S. economy is now performing much more strongly than China's economy.

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Going by the growth rate of the value of trade between the two nations, it appears that the U.S. economy turned a corner in August 2012, when it briefly turned negative. Since then, the relative health of the U.S. economy appears to have improved, which we see in the form of a rising demand for imported goods. For the data just released for February 2013, it appears that pace of economic growth in the U.S. is outstripping the rate of growth in China.

Meanwhile, the pace of growth of the Chinese economy appears to have rebounded off its slowness from last year, confirming that nation's economy has likewise improved, although not at the same rate as the U.S. economy.

This period of increased demand for imported goods in the U.S. approximately coincides

Twenty-eight weeks ago, on September 23, 2012, a new trend in the seasonally-adjusted number of new jobless claims filed each week began. That trend has been characterized by extreme volatility, affected by such factors ranging from California's inability to process large numbers of claims in early October 2012, the impact of Hurricane Sandy from early November through early December 2012, and a carry-over effect from December 2012's fiscal cliff event that ran from mid-January through mid-March 2013. And for March 30, 2013, perhaps a spike from the new seasonal adjustment factors that were just introduced in the last several weeks!

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Let's get into the fiscal cliff carry-over effect, which we're considering as a hypothesis for what we observe in the data. Here, approximately 500 publicly traded companies issued special or extra dividend payments to benefit their investors, who were seeking to avoid the risk of having

Today, we're following up our exploration of the fractal nature of the S&P 500 with an updated version of what we'll describe as the current micro-rally in the market, to which we've added some key points of reference:

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On 5 April 2013, the trailing year dividends per share we're projecting based on the available dividend futures for 2013-Q2 was $32.20, with the S&P 500 closing at $1,553.28. At present, the projected trailing year dividends per share for the S&P 500 is increasing at an average rate of $0.0177 per trading day, or $0.088 per 5-day trading week.

The "sell signal" provided by our power-law, regression and statistical analysis-based method would be found by taking a given trading day's projected value for trailing year dividends per share and plugging it into the power-law formula we've indicated on the chart, then subtracting that result by three times the

When should you sell your stocks?

(Click to enlarge)

Not long ago, we indicated that a 150 point decline in the value of the S&P 500 would be a "clear sell signal" for investors.

But then, a week later, we suggested that there might be a less clear sell signal, one that could be used to shrink the amount of a haircut that an investor would have to take when reacting to a pending break down in stock prices. After all, given today's stock prices, a 150-point plunge in the S&P 500's index value would represent nearly a 10% haircut for an investor. Isn't there some way to reduce the size of the hit that would allow an investor to keep more of the gains in the value of their shares after the stock market has started to turn south?

Well, sure there is! An investor could determine

According to Standard & Poor's [Excel Spreadsheet], in March 2013, 73 publicly traded companies in the U.S. acted to cut their dividends, the most since the all-time record of 93 was set in December 2012. To put those numbers in perspective, in a typical month when the U.S. economy is not being dragged down by recessionary conditions, fewer than 10 companies will act to cut their dividends.

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But the U.S. economy is not currently in recession, despite having passed through what we'll describe as a microrecession in the fourth quarter of 2012, which is why the number of dividend cuts was so elevated in the second half of 2012 leading up to December. [By our definition, a microrecession is a period of very slow growth or even outright contraction in an economy that is too limited in scope, severity or duration to qualify as

In playing our "what if" game with the S&P 500 last week, we announced that the chart we featured would be "the last updated version of this chart that we'll be featuring for some time."

But then, the S&P 500 set a new all-time high as measured by the value of the index's daily closing value, and what better way to mark the occasion than to feature a new version of that chart, which we will be featuring for some time!

Basically, we've retired the "zoomed-in" version of our chart tracking the change in the growth rates of trailing year dividends per share, which define the realistic future expectations for earnings, and the daily and 20-day moving average of S&P 500 stock prices and introduced the full "zoomed-out" version of the chart! Now, you can see everything that we currently see when we peer into our crystal ball!