August was a bad month while September was rather jolly good for stocks. S&P500 closed the month of September 2010 with a 9% gain. In fact this September was the best September for the U.S. stocks in more than 70 years (since 1939). The gain in September more than makes up for the 4.75% August loss.

We’re now entering the month of October and everyone is excited and hopeful that bull will again rule the trading floor. Better still if only the bull can charge till the end of the Christmas.

 

1. Stock crashes happened on the month of October – the 20% drop in 1929 (Black Friday), 14% plunge in 1932, 10% drop in 1937, 22.6% tumble in 1987 (Black Monday) and 18% decline in 2008 (Black Week).
2. October is bottoming month – 5 (1957, 1966, 1974, 1990, 2002) out of last 10 bear markets (declines of 20% or more) have ended in October
3. October is also the month that witness 4 out of 17 corrections (losses of between 10% to 20%) that ended in this month
4. The third year of the president’s term in office usually is a very bullish market as far as stocks are concerned
5. Since 1945, S&P 500 recorded its best results in the fourth quarter of all years, rising an average 3.6% versus 1.9%, 1.9% and 0.7% for the first, second and third quarters respectively
6. Gerald Celente believes that this year’s is going to see the market hit rock bottom, most likely October, because financial stimulus is running out. The bail-out bubble hence is set to burst
7. The ratio of Put Option against Call Option is at 12:1 on the S&P500 suggesting some big-boys are making huge bets that the month of October is going to be super bearish

 

So, should you take the past events as a Holy Grail and keep your money under the pillows? Or should you play the contrarian game and hopefully you’re right hence makes great money in the process? After the closing bell on the first day of October, the stocks seem started off on a positive note, at least the Dow Jones, Nasdaq and S&P500 ended in green.

 

Unlike the past October’s eerie crashes, this time investors may find some comforts in the strong growth in Chinese economy. Nevertheless all hints point to another round of intervention from Federal Reserve and the U.S. government directly in rejuvenating the weak economy and high unemployment – more stimulus programmes. The month of Halloween can be really scary sometime.   

Other Articles That May Interest You …

• A Second Round of Recession or Major Correction?
• The New Great Depression is a Different Animal, Stupid
• Economic 9/11 after $700 billion Bailout Plan Rejected
• Bad Friday for U.S. but Black Monday for Asia
• Celebrating 10th Anniversary of Stock Market Crashes

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October 2nd, 2010 by financetwitter

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