Historically, October has a rocky relationship with the US stock market. Major single day crashes of the last century happened in October in 1929 and again in 1987. More recently, on October 6, 2008, the Dow plummeted 800 points and dropped 13% by the end of the month.
Assessing economic recoveries are inevitably going to compare year over year returns to these October panics. And actually, October frequently marks the end of these market declines as the market bottoms out. The following months are some of the best in the year, in part because of the to January effect rally.
That said, October is tricky for traders. Volatility hovers around earnings seasons and measures taken by companies in earlier quarters start to materialize in returns leading up to the holiday season. Apple (AAPL) seems to have its best monthly returns in October, averaging 8.5% over the past 20 years.
Written by Freda Ding. Image sourced from photobucket.