Market Update 8.30.24

Once again, our 7-day predictions were remarkably accurate, staying within a quarter of a standard deviation across all three major indices we track. As anticipated, the markets remained generally flat over this period.

Looking ahead to next week, we foresee a similar trend. While there may be a slight upward bias, the probability of a significant upward move is low. Additionally, there is considerable downside risk if traders react negatively to unfavorable news. Although this outlook aligns with the recent medium-term market rally, it reinforces our view that portfolio managers should consider maintaining neutral risk positions in the coming week.

Our model's outputs closely mirror last week's results, driven by the consistent market conditions that serve as our inputs. The price targets have been updated to reflect the latest closing prices as of August 30, 2024.

The whisker chart above highlights significant standard deviations, reflecting a considerable level of historical market indecision under similar conditions dating back to 2012.

The bar chart above illustrates the probability of positive returns over time. The model's nominal probability of positive return is 63%, so when observed probabilities fall below this threshold, it signals historically significant downside risk in the market.