Keystone's October Seasonality

The cool Autumn days of October are here; the notorious month that congers up images of crashes and panic, leading to the Wall Street adage, "The October Effect." This effect is simply the perception that the market tends to do poorly in October.  Notable dates include The Panic of 1907 occurring in October, "Black Thursday" on 10/24/29, "Black Monday" on 10/28/29, "Black Tuesday" on 10/30/29 and "Black Monday" on 10/19/87, where the Dow Industrials dropped 23% in one day!

Returning to the seasonality aspects, the broad markets are up about 0.2% for the month of October, flatish, nothing to write home about but definitely not a large negative number which would be assumed considering the crashes and bad connotations with October.

Technology and biotechnology sectors typically do well in Q4 (October-November-December).  The quarter, Q4, is typically up 4.3%. October is not typically a good month for small caps (RUT) stocks. Many traders try to position themselves in tech during September and October to take advantage of the seasonality. This year appears to be a crap shoot due to the weak economic conditions now circling the globe.

Gold is typically buoyant from August thru October with the India and China holiday events and marriage seasons but again, this year the anecdotal data shows this seasonality may not be holding water. The coming Diwali season of lights in India typically marks a pull back for gold mid October thru November.

Typically a peak in oil prices will occur in October. This is reasonable considering the coming global slowdown.  The SPX is typically up the final couple days of the month. The results from the back-to-school sales help to project the holiday season sales. Anecdotal data so far on back-to-school sales is not encouraging for the holiday sales this year. October retail data will tell more.