October Historical Market Trends

Traders are always reading about historical market trends and the "month of October" is no different from any other. Whatever the data and information you're reading, do some research of your own to justify any action you decide to take.

Over the years I've heard, just as you may have also, that "this is now, that was then", "you can't compare today's times with the past", "things are different now", etc. etc.

These all may be true, but all throughout school we are taught to study history and see what the outcomes were. Yes, we have to adjust and compensate for the changing times, but history, and historical market trends in this case, can be valuable.

In the end though, the objective analysis and adjustments we make for the current markets as individuals will likely produce better results. This is no new concept either, successful people and business owners base many of their decisions on historical models that have already been proven to work.


October Curse vs. Objective Analysis: The Choice Is Yours
October 12, 2010

By Elliott Wave International

Over the weekend, I went shopping for Halloween decorations. In the store, one of the clerks was wearing a white T-shirt with a puff-paint rendering of the Dow Jones Industrial Average. The line representing prices was the color of blood red, dripping and splashed across the front. When I asked him what it was, he said "the October Curse."

'Tis the season of stock market adages; those age-old Wall Street platitudes that claim stock prices perform a certain way during certain months of the year. The problem is, such correlations are hardly a guarantee.

Take October, for example. Yes, this month has marked some of the darkest periods in stock market history: 1929, 1987 and on. Historically, however, it's not the worst performing month. For example, the supposed "Halloween Jinx" failed to bring a deathly pallor to stocks in 2008, as the final days of that year's October saw the biggest weekly gain since 1974.

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Then there are these familiar saws of seasonal wisdom:

"As Goes The First Week of January, So Goes The Month"-- In the first week of January 2010, the stock market enjoyed a powerful winning streak. Yet, by the end of the month, prices were back in the red, circling the drain of a two-month low.

"Sell In May And Go Away" -- And don't come back 'till St. Leger's Day (September). If investors heeded this wisdom this year, they would have missed one of the strongest uptrends in stocks of the entire year from July to September.

"September Curse" -- If you think October is supposed to be bad, September is widely assumed to take the financial killing cake. Yet this year, U.S. stocks enjoyed their strongest September in 71 years!

Bottom line: Don't "buy" your trading strategy before the trend actually arrives. The choice comes down to old adages, or objective analysis. Pick the latter.

Remove Dangerous Mainstream Assumptions from Your Investment Process. Elliott Wave International's FREE 118-page Independent Investor eBook shows you exactly what moves markets and what doesn't. It will change the way you invest forever. Click here to learn more and download your free, 118-page ebook.

This article was syndicated by Elliott Wave International and was originally published under the headline October Curse Vs Objective Analysis: The Choice Is Yours. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.




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