Thursday, March 29, 2018

S&P 500 Index vs Equation of Time | 2015 - 2018

The apparent motion of the Sun along the plane of the ecliptic is not regular (Kepler's laws of planetary motion). This non-uniform motion is caused for two reasons: (1.)The Earth's orbit is not circular but elliptical (Eccentricity), and (2.) the Earth's axis is tilted about 23 degrees north and south from the ecliptic (Obliquity). Mean Solar Time assumes that the orbit is circular, that there is no tilt, and that each day of the year is of exact equal length (60 x 60 x 24 = 86,400 seconds). However this is not the case: The real astronomical Apparent Solar Time differs from the Mean Solar Time (the time of our clocks) by the Equation of Time. This equation describes the discrepancy between the Clock Time and the time indicated by a sundial (the word equation is used in the medieval sense of reconcile a difference) in a given place at the same time. The Clock Time actually matches the Apparent Solar Time only during four moments per year (December 25th, April 15th, June 13th, September 1st) while on November 3rd the Clock Time in New York City is as much as 16 minutes behind and on February 11th more than 14 minutes ahead of the real astronomical time. 

Days when the Equation of Time is at zero, at extremes or even at midpoints between peaks and troughs oftentimes coincide with a change in trend in financial markets (at least short term). The Equation of Time for New York City will be at zero on April 15 (Sun) and at a peak during May 14 (Mon). The midpoint between the trough on February 11 (Sun) and the peak on May 14 (Mon) is today, March 29 (Thu).