The Standard & Poor’s 500 Index and The Chaotic Growth Model
The Standard & Poor’s 500 Index and The Chaotic Growth Model

Author(s): Vesna Jablanović
Subject(s): Supranational / Global Economy, Financial Markets
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: Financial markets; Financial crises; Equilibrium
Summary/Abstract: Standard & Poor’s 500 Index (the S&P 500) includes the stocks of 500 of the most widely traded stocks in the U.S. It represents about 80% of the total value of U.S. stock markets. The basic aims of this paper are: firstly, to create the simple chaotic stock market index growth model that is capable of generating stable equilibrium, cycles, or chaos; secondly, to analyze the local stability of the S&P 500 index movements in the period 1932-1982; thirdly, to analyze the local stability of the S&P 500 index movements in the period 1982-2009; and fourthly, to discover the equilibrium levels of the S&P 500 index in the observed periods. This paper confirms the existence of the stable convergent fluctuations of the S&P 500 index in the observed periods. Further, two Elliot wave patterns were identified in the period 1932-2009. Also, the golden ratio can be used to define the equilibrium level of the S&P 500 index in the presented chaotic model.

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