Is October A Bear Killer or A Bear Breeding Ground? (Preview)

By Lawrence G. McMillan

Conventional wisdom holds that October is a bear killer. That is, the market starts to head south in September, accelerates in early October, and then bottoms some time in October. From there it rallies. So the decline – while sometimes very steep in early October – is terminated in October. Hence the term “bear killer.”

However, not all Octobers are the bottom of the market. Sometimes they’re the top. This fact is usually suppressed, for some reason. The following list summarizes significant Octobers. There have been many which do not have particular bearing on market tops or bottoms (the last three, in fact). I looked at this data back to 1971, which is when I first began trading seriously. Since 1971, of the 47 Octobers in question, 17 had no bearing at all (although the frequency of these has increased sharply in recent years). Of the remainder, 17 were bear killers in that the October bottom extended forward in time (led by the October 1974 bottom that killed the 1973-74 bear market), 5 saw an October rally that quickly faded in the coming months, and 8 were outright market tops – some of them the start of extremely large bear markets (1973, 2000, 2007)...

Read the full article, published on 10/26/18, by subscribing to The Option Strategist Newsletter now. 

The Option Strategist Newsletter $29 trial

Share this

Option Strategist
Blog Search

Trading or investing whether on margin or otherwise carries a high level of risk, and may not be suitable for all persons. Leverage can work against you as well as for you. Before deciding to trade or invest you should carefully consider your investment objectives, level of experience, and ability to tolerate risk. The possibility exists that you could sustain a loss of some or all of your initial investment or even more than your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and investing, and seek advice from an independent financial advisor if you have any doubts. Past performance is not necessarily indicative of future results.
Visit the Disclosure & Policies page for full website disclosures.

-->