(Bloomberg Business) — If you haven't memorized it yet, jot down this number: 1,867.01.
That was the lowest point in the Standard & Poor's 500 Index during yesterday's carnage, and many of the professional chart watchers out there believe there's a good chance we'll see it again even if China has refilled the punch bowl and everyone's back out on the dance floor today.
This is what's known as a "retest" in the technical analyst lexicon. Dramatic and climactic selloffs like yesterday — where it seems like everyone's throwing out the baby, the bath water, and the whole darn tub — are often followed by sharp recoveries. But just like a horror-movie villain that you think has been slain in the second act, you should know better.
It happened following the "flash crash" of 2010.
And it happened again in 2011 when the U.S. government kissed goodbye to its AAA rating at Standard & Poor's.
Will it happen again? Let's check with some of the brightest chart gazers out there. First up is Ari Wald, the head of technical analysis at Oppenheimer & Co. The good news? He's optimistic. The bad news? The optimism is about his favorite NFL team — the glorious Philadelphia Eagles — and not about the market holding well above that low in the near term.
"It should take more than a day to stabilize from an eight-month breakdown in trend," he said today over e-mail. "A successfully tested base is important because it demonstrates that strong hands want to own a security at a particular level. The base develops simply as market participants with different mandates come to different conclusions at different times. At the end, strong hands win." (He's talking about investors with strong hands there, but same probably applies for da Birds.)