2016 October Seasonal Trade (Preview)

By Lawrence G. McMillan

The time of the year for the October seasonal trade is at hand. This is one of our best seasonal trades – to buy “the market” at the close of trading on October 27th, and to sell the position at the close of trading on November 2nd.  However, we do not take the trade in years when there was not a pullback in October.

Specifically, there has to be at least a 3.25% pullback, measured using closing prices, sometime in October in order for us to take the trade.  It doesn’t seem likely that there will be such a pullback this year.  $SPX closed at 2168.2 on September 30th, which is the high close for the entire month of October 2016.  A 3.25% decline from there would mean that $SPX has to close below 2098.  That has not happened.  While it is still possible that it could occur today or tomorrow, it seems extremely unlikely.

For the record, we will outline...

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