As readers know, we are arguing that the August 9th intraday level of 1100 on the S&P 500 Index was, at least, an interim selling climax, and may have been a final climax. In an earlier piece (see www.cumber.com) we cited a First Trust Portfolios LP, August 11, research study. It showed that down days of greater than 6% were followed, after an appropriate period of time, by much higher stock markets. Today we will add another indicator to the list of support for the climax thesis. This one is compiled by Jason Goepfert and is rooted in an economic survey released by the Philly Fed.
First, a reminder: we do not know whether the August 9th intraday low was an interim climax or a final climax. We will not know that answer for another six months or so. What we do know is that it was subsequently tested twice in the futures market, and the 1100 level held. Since those tests, the S&P 500 Index has rallied to 1212, which is about 10% above that intraday bottom. The trend seems to be positive.
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