In the biggest jump since September 2005, the Consumer Price Index gained 0.8% in November, more than the 0.6% increase expected by analysts.
Q: How has the S&P 500 Index reacted in the past when, during the fourth quarter of the year, the monthly CPI report shows a growth in the price index that is higher than the median estimate of analysts surveyed?
A: According to the 26 previous occurrences of this event, EventEdge indicates that SPX has shown a somewhat bullish edge that peaks 19 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Friday, Dec. 14, 2007) is Monday, Jan.14, 2008. SPX rallies in 81% of the cases (21 of 26) by an average of 3.3% relative to the close on the event date. The average of the five declines is -1.8%. The overall return of the 26 cases is 2.3%, which, based on the close of SPX on the event date (1467.95), provides a target price of 1501.71.
If we narrow the event to just those prior occurrences in the month of December, we get a smaller sample but a stronger edge: According to the six previous occurrences of this event, EventEdge indicates that SPX has shown a strong bullish edge that peaks 10 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Friday, Dec. 14, 2007) is Monday, Dec. 31, 2007. SPX rallies in 100% of the cases (6 of 6) by an average of 3.7% relative to the close on the event date. The overall return of the six cases is 3.7%, which, based on the close of SPX on the event date (1467.95), provides a target price of 1522.26.
If you would like to see more details of this historical edge, go to www.markethistory.com Gibbons Burke is editor of MarketHistory.com.
