The October Seasonal Trade 2022 (Preview)

By Lawrence G. McMillan

One of the most reliable and profitable seasonal trades that we have in our arsenal is what we call the “October Seasonal Trade.” A seasonal trade is one based on the calendar, not on any price or market action. 

When we first used the trade, in 1997, we backtested it through 1978. It had worked every year in that time frame. Now, its track record is extremely strong, but no longer perfect. There was a loss in 2001 and another in 2006, and we noticed that in both cases, $SPX had not really declined during October. The best results have come when there was a substantial decline in the broad market somewhere earlier in October. For example, 2008 was one of the best October Seasonal trades in history. Since then, we have avoided the system when there was not a decline of at least 3.2% earlier in October. Those “omissions” saved a lot of money until last year, when we also omitted the trade, yet $SPX gained 108 points over the seasonal time period. This year, there is no problem since $SPX is down well more than 3.2% from its highest October price.

Here is the complete track record summary, going back to 1978:

October Seasonal Trade, using $SPX – 35 years

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