Stocks continue to plow higher, with most major indices making new highs for 2023 just as the year is coming to an end. Furthermore, $SPX is just a short distance from its all-time highs, set in January 2022, so new all-time highs seem certain to be attained early in 2024.
There was finally a correction of sorts this week, as some late afternoon selling on December 20th ballooned into a 70-point decline in a matter of less than two hours. Considering that the market had been more or less straight up for days even weeks and it was thus quite overbought, it was not a total surprise to see something of that nature.
The title of this article is a question that seems to be asked in many places recently. We have written about this in the past, and our intention in this article is not to re-hash previous discussions. Rather, in this article, we’ll document periods of time where $VIX got low and stayed low for a long while.
We have been trading this seasonal spread annually every year since 1994, except for 1995. Last year, we were stopped out, but still with a gain.
The broad stock market continues to plow ahead, building on the recent upside breakout over 4400. Even though there are some signs of an overbought market, we are not seeing any confirmed sell signals yet. $SPX has overcome two small resistance levels, leaving the 2023 highs near 4610 as the next area to overcome. Above there, the all-time highs at 4800 might be challenged.
Stocks did an abrupt about face this week and have rallied strongly every day. At first, this rally was propelled by some strong oversold conditions and the fact that $SPX had bounced off its lower downtrend line. But as the week wore on, reports from the FOMC meeting and the Unemployment statistics emboldened investors who care about such things. This was all taking place during what is arguably the strongest seasonal pattern of the year.
The October Seasonal trade will take place this year. It is a very simple trade: buy “the market” at the close of trading on October 27th, and sell out your position on the close of trading on November 2nd. There are adjustments for weekends, but neither of those dates falls on a weekend this year.
Join Larry McMillan as he discusses the current state of the stock market on October 23, 2023.
