FV Good News Is Bad News For October


The media loves to tell scary stories about the performance of the S&P 500 in October.

It’s not hard to do with the crash of 1987 which left October down 21%, and more recently October 2008 which shed about 17% from investors’ portfolios on top of an already punishing year.

Big down months like those are certainly scary, but the media usually neglects to report on “the rest of the story”. So before you blindly believe the hype about October consider this…

Almost exactly one year ago today I wrote a piece for our members (maybe you read it) which concluded that the month of October in 2015 was, statistically likely to be a “bear killer” that year.

In that article I referred to October, as a “gold mine” and a “great time to find bullish swing trades”.

Last October the S&P 500 returned 8.30% which was the 5th best October performance in the last 49 years!

Needless to say, if you missed lasted year’s October move, you missed the best month of the year, so be careful about what you believe in the media.

Unfortunately, if history is as helpful as it was last year, October 2016 does not have the same “gold mine” qualities it had in 2015.

As you’ll discover in this week’s Market Outlook video, the markets have some very clear lines of support which you should treat with great respect.

Additionally, the performance of the leading sectors as measured by our Triple Play price and volume leadership indicators should be also be monitored closely, because the bulls will not have the wind at their back this October.

Video Length - 00:34:54

If you look at the last 49 years of data in the S&P 500 (beginning in 1966) you’ll find that October looks like this:

Average return: 1.0%
Percentage of positive months: 59%
Biggest up month (1974): 16.3%
Biggest down month (1987): -21.8%
Average up month (average return when positive): 4.6%
Average down month (average return when negative): -4.3%

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Chee Hin Teh 4 years ago Member's comment

Thanks for sharing