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2 years ago

October the Bear killer

During this time of year many commentators seem to go into overdrive with all sorts of predictions for the coming 3 months.

Many refer back to the 1987 October crash as evidence to be wary at this time of year,
Consider this, the market has only made 2 significant corrections of this magnitude
in the 114 years of the Australian markets existence. eg 1929 and 1987.

Add in the company reporting rumours and you can have a trading public unwilling to take advantage of any market movements.
I would suggest to you these statements are being made by journalistic pundits and not traders.
As traders it is our business to take advantage to statistical facts to tip the advantage in our favour.

So lets look statically at what really happens during the months of October and November.

 

Year October % November % Comments
92 -59 4 27 2 Last Recession In Australia
93 150 8 116 5.5
94 13 .7 -147 -7.4
95 -61 -2.9 83.5 4.1
96 67 3 39 1.7
97 -288 10.7 9 .4 Asian credit crisis
98 52 2 122 4.8
99 4.4 .2 148 5.3
2000 -44 1.3 20 .6 Tech Wreck
2001 200 6.6 87 2.7 Recovery from 911
2002 72 2.4 18 .6
2003 102 3.2 -85 -2.6
2004 113 3 152 4
2005 -181 -4 175 3.9
2006 230 4.5 97 1.8
2007 186 2.8 -221 -3.3
2008 -582 12.7 -275 7 GFC begins
2009 -100 -2.1 51 1.3
2010 78 1.8 -77 1.7
2011 289 7.2 -178 -4 Recovery begins
2012 130 3 -11 -.2
2013 206 4 -105 -1.9
2014 234 4.4 ? ?

The stats above show us that October is really market dependant.
When markets are bearish October is bearish, when markets are bullish as they are now October can be a very positive month.
The statistics show us October is down only 7 out of 22 years and those years were during established bear markets, where November is down 8 out of 22 years often following a positive October.

Currently the XJO200 has set a significant low at 5122 and is currently trading up through several significant resistance levels, look for a retest of the all time high at 5700 before Christmas.