October: (Mostly) Normal
This is a quick look at how the U.S. market has performed historically in October.
First the numbers …
From this 30,000 foot view, October hasn’t fared any better or worse than the average month over the last 80 years.
But averages can be misleading because they say nothing about how consistent an observation has been or whether it’s waxing or waning, so below I’ve assumed a trader was only long the S&P 500 in October (red) versus the average month (grey) each year since 1930.
[logarithmically-scaled, growth of $10,000]
The graph confirms that October has consistently run in line with the market.
October gets a bad name because of 1987, and for sure it’s seen more than its fair share of bad times; 3 of the 13 worst months for the S&P 500 since 1930 have come in October (1932, 1987, and 2008).
But a few outliers are insufficient evidence of bearish voodoo, and so I’m calling the calendar month bias for October NEUTRAL.
See our monthly seasonality map for daily seasonality predictions in October.
Happy Trading,
ms
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