On October 11, just two days before the CPI number was announced, Bloomberg ran an article entitled,"JPMorgan Says Too-Hot CPI Would Put Stocks at Risk of 5% Tumble." And, they were not the only one.
In fact, in a Barron's article later that day, the author outlined the common feeling in the market that day: In a 1988 study conducted by Cutler, Poterba, and Summers entitled"What Moves Stock Prices," they reviewed stock market price action after major economic or other type of news in order to develop a model through which one would be able to predict market moves RETROSPECTIVELY. Yes, you heard me right. They were not even at the stage yet of developing a prospective prediction model.
In 2008, another study was conducted, in which they reviewed more than 90,000 news items relevant to hundreds of stocks over a two-year period. They concluded that large movements in the stocks were NOT linked to any news items: Now, please take note that my views were not based upon economics, upon news, or upon anything other than mathematics. In fact, the market shocked those outside my service with this turnaround, as outlined by the Barron's article cited above. But, our members were quite prepared for a potential rally to begin: