Thankfully, Chris Ciovacco has already tried to answer the question. Chris is the Chief Investment Officer for Ciovacco Capital Management, LLC. http://www.ciovaccocapital.com/sys-tmpl/hometwo/
I'll give you all the bottom line.
There have been 9 rate cutting cycles since 1970. But, Chris only includes data since the 80s in his analysis, since inflation rates were so high in the 70s. He has presented the data in 2 ways, and I will show you both.
First, the probability that the market will be higher after the rate cut (his analysis was run in September of 2007, so that is why the dates shown are from September):
As you can see, there is a 75% chance that the market will be higher about 3 months after the rate cut. The earlier time period after the cut is shaky at best.
In the next chart, he demonstrates what would happen to $100,000 invested in the S&P 500 for one year after the Fed rate cut.
Hang in there everybody.
Also, in breaking news, Thompson Finanical expects earnings to grow by 11.4% when not including financials for the 4th quarter reports (earnings down 19% if include financials in the forecast).