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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)...

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