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Cumberland Expects S&P 500 Gap to Close This Spring

|Includes: SPDR S&P 500 Trust ETF (SPY)

Cumberland agrees with something I stated on August 9th -- although I doubt they read my article ;) -- that they expect the 'Lehman Gap' on the S&P to close:

The 1000 level is also the bottom of the five-week waterfall when the market tumbled over 200 S&P 500 index points last year. This period is called the “Lehman gap” and is measured by about 1000 on the downside and about 1200 on the top. It represents a time when stocks fell on a worldwide, highly correlated basis following the Lehman Brothers failure.

A number of market strategists expect the US stock market to eventually try to close the Lehman gap. We are among them. Our target for this closure is next spring. Others, like Ed Yardeni, argue that it will happen quickly as earnings outcomes for the 4th quarter of this year are discounted this coming October. Others point to the large amount of uninvested cash as the source of fuel for the additional stock market rally to come. Yet others look to all the “golden crosses” in various indices as a reason for optimism.