October Effect or October High: Which is More Possible?

Tiger_comments
09-30

The "October Effect" is considered one of the most notable periods on the financial calendar, as two major U.S. stock market crashes—October 1929 and October 1987—occurred during this month.

Historically, October has shown significant volatility, with the Dow Jones experiencing the highest intraday swings since 1896.

According to LPL Financial, since 1950, the market has seen greater than 1% fluctuations in October, more than any other month. $S&P 500(.SPX)$

Although September has recorded the most negative returns over the past 90 years, the events that triggered the 1929 crash and the 1907 panic actually began in September or earlier.

The 1929 stock market crash, which started on October 24, became fully disastrous by October 28 and 29, leading to the loss of $30 billion in wealth within two weeks—equivalent to the U.S.’s total spending during World War I. It took until 1954 for the market to recover to pre-crash levels.

Similarly, "Black Monday" on October 19, 1987, saw $DJIA(.DJI)$ drop 22.6% in one day, erasing $500 billion in value globally. There were no apparent triggers for this crash, and theories like herd behavior and market inefficiency continue to be debated.

But the market has repeatedly hit new highs even in the historically weakest month of September, breaking the September curse.

Can the market break the October effect this time?

Are you ready for October effect or October high?

Which is more possible to happen?

What's your trading plan for October?

Avoid high volatility or embrace it?

Leave your comments or join the topic to win tiger coins~

# Will October Hit New Highs or Repeat October Effect?

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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  • MHh
    ·09-30
    TOP
    Unfortunately this is the month leading up to the US presidential elections where both candidates would have different effects on the various stocks. Also, the market has rallied crazy in the last month. Logically, it is hard to think otherwise why this month would not be a volatile one. I expect many to take profits and also flight to safety before Nov. I will be one of them[Chuckle]. Cash is still safer in the pockets and much needed to buy at the next dip.
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  • RXU
    ·09-30
    Better to be on defensive. it scares me a little when the big boys ask retail to buy buy buy! and everyone is feeling euphoria from recent marlet highs. It just keep rallying!

    I expect the as the month leading up to the US eelection, there might be a  flight to safety first before the sign of apparent presidential winner becomes clear. Hoping if it happens, I am focus and will buy at the next dip.
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  • Success88
    ·09-30
    In history due to many companies Nov 3rd quarter earning report the market in Oct will will had more volume then usual.. Bullish is more than bear. With interest rate go downs. Companies report will be more higher due to exchange rate different 😆
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  • DaveaPhoenix
    ·09-30
    The "October Effect" suggests markets may crash in October, driven by past events like 1929 and 1987, but it’s more psychological than based on consistent data. October can be volatile, but it also presents opportunities for gains, especially after September downturns.

    This year, market direction depends on several factors, such as Fed rate decisions, earnings reports, inflation data, and geopolitical risks. While an "October high" is possible with strong earnings and favorable policy moves, negative economic data or rising global tensions could trigger declines.

    Traders can either embrace volatility through short-term trades and technical analysis or avoid it by focusing on long-term goals and maintaining a diversified portfolio. Proper risk management is key, using tools like stop-loss orders or options. For long-term investors, October’s volatility might offer buying opportunities in quality stocks at lower prices.

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  • icycrystal
    ·09-30
    TOP

    based on history, October has shown significant volatility, with the Dow Jones experiencing the highest intraday swings since 1896.

    if trend up, good, if trend down, an opportunity to buy good companies at a good price...

    @Shyon @GoodLife99 @Universe宇宙 @rL @Aqa @koolgal @LMSunshine @SPACE ROCKET @HelenJanet @TigerGPT

    Can the market break the October effect this time?


    Are you ready for October effect or October high?


    Which is more possible to happen?


    What's your trading plan for October?


    Avoid high volatility or embrace it?


    Leave your comments or join the topic to win tiger coins~

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    • TigerGPT: 

      As an AI financial analyst, I can provide some insights into the October effect and the possible trading strategies for October. The October effect refers to the historically high volatility and market declines experienced in the month of October. While it is true that October has shown significant volatility in the past, it is important to note that historical patterns do not guarantee future performance.

      The market can break the October effect this time, but it is difficult to predict with certainty. Various factors such as economic indicators, corporate earnings, and geopolitical developments can influence market trends. Therefore, it is crucial to consider a comprehensive analysis of the current market conditions before formulating a trading plan for October.

      Regarding trading strategies, different investors may have different approaches based on their risk tolerance and investment objectives. Here are two possible strategies to consider:

      Avoiding high volatility: Some investors may choose to adopt a more conservative approach and minimize exposure to high volatility by diversifying their portfolio, avoiding speculative trades, and focusing on more stable and established companies with solid fundamentals. This strategy aims to protect capital and limit potential losses during periods of increased market volatility.

        

      Embracing high volatility: On the other hand, some investors may view high volatility as an opportunity for profit. They may actively seek undervalued companies during market downturns, considering them as attractive buying opportunities. This strategy requires a higher risk tolerance and a thorough analysis of individual stocks to identify fundamentally sound companies that may recover and provide long-term returns.

        

      It is important to note that trading in high-volatility periods can be challenging and unpredictable, and it is crucial to have a well-defined risk management plan in place. It is also recommended to stay updated with market news, economic indicators, and company-specific events to make informed investment decisions.

      Remember, investing always carries risks, and it is important to carefully assess your risk tolerance and seek professional advice if needed. This information is for educational purposes only and should not be considered as investment advice.

      09-30
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  • Shyon
    ·09-30
    TOP
    October is anticipated to continue being bullish for the stock market. Historical patterns suggest that despite the October Effect, current market dynamics and economic indicators may support upward momentum. Positive investor sentiment and favorable corporate earnings could contribute to breaking away from past volatility.

    For me, the trading plan for October is to ride the uptrend until an exit signal appears. Establishing clear parameters for exit signals will be crucial, whether based on technical indicators, volume changes, or significant news developments. Utilizing options or other hedging strategies can help manage risk while still participating in potential upward movements.

    Overall, the outlook is optimistic, with a strategic focus on navigating the market carefully and adapting to evolving conditions.
    @Tiger_comments @TigerStars @TigerGPT

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    • TigerGPT: 

      As an AI financial analyst, I cannot predict future market movements with certainty. However, I can provide some insights based on historical data and current market dynamics.

      The "October Effect" refers to the historical tendency for increased market volatility and negative returns during the month of October. This is primarily due to significant market crashes that occurred in October, such as the 1929 and 1987 crashes. However, it is important to note that historical patterns are not definitive indicators of future performance.

      Despite the October Effect, it is worth considering the current market dynamics and economic indicators that may support upward momentum. Positive investor sentiment and favorable corporate earnings can contribute to a breakaway from past volatility. It seems that you are planning to ride the uptrend until an exit signal appears.

      Establishing clear parameters for exit signals is crucial, whether based on technical indicators, volume changes, or significant news developments. This will help you manage risks and make informed decisions. Additionally, utilizing options or other hedging strategies can be beneficial in managing risk while participating in potential upward movements.

      It is important to approach the market with caution and adapt to evolving conditions. Monitoring market trends, staying informed about news developments, and being flexible with your trading plan can help you navigate the market more effectively. Moreover, diversifying your portfolio and considering long-term investment strategies rather than short-term speculation can help mitigate risks.

      Please keep in mind that investing in the stock market carries risks, and past performance is not indicative of future results. It is always recommended to consult with a financial advisor or do thorough research before making any investment decisions.

      (Note: The information provided here is for reference purposes only and does not constitute investment advice.)

      Let me know if there's anything specific you would like me to assist you with.

      09-30
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  • SPACE ROCKET
    ·09-30
    Waiting for BTC and it's associated stocks to take flight.
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  • fir3tiger
    ·09-30
    yup it is possible
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  • Cadi Poon
    ·09-30
    儘管9月份創下了過去90年來最負回報的記錄，但引發1929年崩盤和1907年恐慌的事件實際上始於9月份或更早。

    1929年的股市崩盤始於10月24日，到10月28日和29日已經變得完全災難性，導致兩週內財富損失300億美元——相當於美國在第一次世界大戰期間的總支出。直到1954年，市場才恢復到崩盤前的水平。

    同樣，1987年10月19日的“黑色星期一”，看到$道指(.DJI)$一天內下跌22.6%，全球市值蒸發5000億美元。這次崩盤沒有明顯的誘因，羊羣行爲和市場低效率等理論仍在爭論中。

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  • Universe宇宙
    ·09-30
    @TigerGPT what happen to the stock market during October for the past US election years? grab data from Internet if needed. thank you, buddy.
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    • TigerGPT: 

      Based on the news articles I found, here is some information on how the stock market has performed during October in past US election years:

      In an article by Visual Capitalist, it is highlighted that the performance of the U.S. stock market in election years varies. They provide an infographic showing the market performance in each year of a presidential term, including election years. You can find the infographic here.

        

      Yahoo Finance also discusses how presidential elections affect the stock market in an article. They explore the historical impact of elections on the market and provide insights on the topic. You can read the article here.

        

      Quartz presents a visual history of how presidential elections affect US financial markets. They have charts that showcase the impact of the last six presidential elections on various markets, including treasuries and gold. You can view the charts and read the article here.

        

      Please note that these articles provide historical data and analysis, but the performance of the stock market can vary depending on various factors and circumstances. It is important to conduct thorough research and consider multiple factors when making investment decisions.

      Unfortunately, I couldn't find any specific information or news related to the stock market performance during October in the years of the US presidential election you mentioned (2016 and 2020). However, the articles mentioned above can provide you with a broader understanding of how elections have historically affected the stock market.

      Remember that investing in the stock market involves risk, and it's important to carefully consider your investment goals and seek professional advice if needed.

      09-30
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  • TimothyX
    ·09-30
    “十月效應”被認爲是金融日曆上最引人注目的時期之一，因爲美國股市兩次重大崩盤——1929年10月和1987年10月——都發生在這個月。

    從歷史上看，10月份表現出顯著的波動性，道瓊斯指數經歷了自1896年以來最高的盤中波動。

    根據LPL Financial的數據，自1950年以來，市場在10月份出現了大於1%的波動，超過了其他任何一個月。$S&P 500(.SPX)$

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  • MasterStonker
    ·10-01
    get ready to Rocktober or Uptober man 🤑🤑🤑🤑
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  • Aqa
    ·09-30
    [OMG][OMG] Is October crash coming this year? October always has significant volatility as shown historically. This year’s U.S. presidential election is ramping up. The contest, and its implications, looms large in the minds of investors both in the U.S. and abroad. Correlations between U.S. presidential elections and the performance of the broader U.S. equity market.exist in varying degrees. We should be extra cautious when making trades. It is best to focus on the longer term: the economy and business fundamentals.
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  • ECLC
    ·10-02
    Bypassed "September curse" and ready for likely "October effect". Expect high volatility; more opportunities and higher risks.
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  • Universe宇宙
    ·10-02
    @TigerGPT first day of october stock market down, what is going on? october bear awaken?
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    • TigerGPT: 

      The stock market was down on the first day of October. Here are some possible reasons for the movement:

      Tensions in the Middle East: The escalation of conflicts between Israel and Iran has triggered significant selling pressure. Investors are moving towards safer assets like bonds, gold, oil, and the US Dollar.

        

      Market Reaction to Job Reports and Federal Reserve Comments: Wall Street's main indexes opened lower on the first trading day of October. This was influenced by multiple job reports expected during the week and comments from Federal Reserve Chair Jerome Powell, who pushed back against market expectations for outsized interest rate cuts.

        

      Historical Trends: October has a historical reputation for being a volatile month in the stock market. Significant crashes, such as the 1929 stock market crash and "Black Monday" in 1987, occurred during October. However, it is important to note that past performance is not indicative of future performance.

        

      Market Catalysts: The upcoming US presidential election in November is expected to be a market catalyst. Additionally, recent factors like the Federal Reserve's interest rate cuts and the proposed stimulus by the Chinese authorities can influence market movements.

        

      Considering these factors, it is challenging to predict with certainty what October will hold for the markets in 2024. Investors may choose to either avoid high volatility or embrace it based on their trading strategies and risk tolerance.

      Please note that the information provided is for reference purposes only and does not constitute investment advice. Investing in the stock market carries risks, and it is important to conduct thorough research and consult with a financial professional before making any investment decisions.

      10-02
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  • Mrzorro
    ·10-03
    I guess this October will be October high as the rates cut and US election on going..Most company reports, and the market seems like 🚀🚀🚀  even high volatility will occur, but I believe that many opportunities also arise. Good companies in good price? let's see [Miser] [Miser] [Miser] Prepare for a roller coaster ride to the moon 🌙
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  • nomadic_m
    ·10-04 18:41
    Trading strategy for navigating October's election-driven volatility involves a dual-pronged approach. We will lock in profits on satellite positions, trimming exposure to high-risk assets, while simultaneously identifying opportunistic entry points to buy the dip on core holdings with strong fundamentals. This tactical shift will also involve adjusting position sizing, tightening stop-losses, and selectively allocating capital to quality stocks exhibiting resilience. By balancing risk management with strategic buying, we aim to capitalize on market fluctuations and maximize returns amidst the uncertainty.
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  • highhand
    ·10-04 09:58
    Oct will be higher than Sep but there will be volatility still. However, if you notice the retracements are getting smaller and smaller since Aug and Sep. that means lower lows, so we are going higher. S&P previous highs is acting like support as we break into a new high for S&P... just buy good stocks on dips and wait for new highs.
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  • Tiger_Contra
    ·09-30

    Awesome October comes?here is a tool for SG Tigers only to make your investments more efficient.

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  • icycrystal
    ·09-30

    based on history, October has shown significant volatility, with the Dow Jones experiencing the highest intraday swings since 1896.

    if trend up, good, if trend down, an opportunity to buy good companies at a good price...

    Can the market break the October effect this time?


    Are you ready for October effect or October high?


    Which is more possible to happen?


    What's your trading plan for October?


    Avoid high volatility or embrace it?


    Leave your comments or join the topic to win tiger coins~

    Reply
    Report