Here's something to think about as you listen to all the talk about whether the stock market has bottomed or not. Historically, when the Dow gets clobbered in October, it gets slammed again in November. In November though, the declines are typically smaller.

Cleve Rueckert of Birinyi Associates took a look at data on the Dow going back more than 90 years. "If we look at the DJIA since 1915 there have been seven Octobers that have been down more than 10% (including this one). In each case, the Dow is down for the month of November," he wrote.

November, over the same time frame, ranks sixth in terms of market performance. Nothing special. But in terms of daily volatility, it ranks second, just behind October. December, historically, has been the best month for stocks.

In November, 1987, the Dow declined 8 percent after October's record 23.2 percent decline. This October, the Dow was down 15.3 percent as of Thursday. Other than 1987, all of the other double digit Dow declines date back to the 1930s and earlier.

Fear seems to have held back buyers after those particularly lousy Octobers. "I think it takes a while for confidence to come back," Rueckert said.

Novembers After Weak October*

% Chg % Chg

Oct '17 -10.74 Nov '17 -2.48

Oct '29 -20.36 Nov '29 -15.33

Oct '30 -10.52 Nov '30 -1.33

Oct '32 -13.50 Nov '32 -8.97

Oct '37 -10.61 Nov '37 -10.63

Oct '87 -23.22 Nov '87 -8.02

Oct '08 -15.33 -

Average: -14.90 -7.79

Questions? Comments? marketinsider@cnbc.com

The massive ice jam around credit markets is beginning to show signs of thawing under the heat of government intervention.

As investors are distracted by the wild gyrations in the stock, the credit markets this week are showing signs that a slow healing process may be taking hold.

The credit markets are "okay. It feels a little better today," said Greg Peters, global head of fixed income research at Morgan Stanley. Libor, the bank to bank lending rate, continues to come down, and some key parts of the credit market are showing signs of improvement, including commercial paper.

The stock market, meanwhile, finished higher Wednesday, but not before making some big swings. The Dow ended at 9180, up 189, while the S&P 500 finished at 954, up 24.

Markets Mayhem

On Friday, investors can say goodbye to the worst month for stocks since October, 1987. The Dow is down 15.4 percent for the month, its 11th worst monthly performance ever. At its low for the month, it was down 27.4 percent. The largest Dow point swing ever was the 1018 point move on Oct. 10. Eight of the 10 biggest point moves for the Dow happened this month, and the average point swing was 605 points.

Expect more volatility on Friday. Investors will be watching for more impact from end of month trading as some mutual funds come to their year end and others rebalance. There will also be a few data points to watch, including personal income and spending, and the employment cost index, all at 8:30 a.m. Chicago Purchasing Managers data is released at 9:45 a.m., and consumer sentiment is reported at 10 a.m.

Fed Chairman Ben Bernanke speaks on mortgage finance at 2 p.m. to a conference at the University of California at Berkeley.

Stocks will likely rock and roll again Thursday.

Wednesday's market was particularly volatile, although for a good part of the day it was unusually calm as investors waited for the Fed's rate decision. In the final half hour, the Dow wiped out a big gain to end 74 points lower. The Dow was up 298 at its peak, and down 174 at its low point.

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"It's surreal every day," said one trader. "The closes are unbelievable."

Heavy fund selling, and some buying, ahead of the end of the month Friday has been blamed in part for this week's wild swings.

"I'm hoping this market settles down after Friday and there's some kind of normalcy next week. The credit markets are remaining tight and overnight lending remains decent," said Patrick Boyle of LaBranche.

The Fed Wednesday shaved a half point from its target Fed funds rate, as expected, but it also made some gloomy, though not unexpected, comments about the economy. The Fed said growth has slowed markedly and the extraordinary financial market stress could put the economy at greater risk.

Econorama

Investors Thursday will be watching for third quarter GDP and weekly jobless claims. There are also some major earnings, including Exxon, Royal Dutch Shell, Marathon Oil, Motorola, CVS/Caremark, Colgate Palmolive, Apache, Waste Management, Avon Products and Newell Rubbermaid.

Stocks on Wednesday can't help but feel some of the spillover of Tuesday's euphoric upswing, as the Fed winds down its two-day meeting with an anticipated rate cut.

Traders expect the Fed to trim the Fed funds target rate by as much as a half point, taking it to 1 percent when it makes its announcement at 2:15 p.m. But it really is the calming of global equities and credit markets that could have more immediate impact on trading than the Fed.

Stocks bounded higher, by a stunning 10 percent plus Tuesday, driven in part by the idea that credit is moving more freely. A report that the Bank of Japan was considering a rate cutpushed the yen lower , in its biggest one-day decline against the dollar in three decades. The Dow rose 889 or 10.9 percent to 9065.12, its second biggest point gain in history. The S&P 500 rose 92 to 940, an increase of 10.8 percent.

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Brown Brothers Harriman currency strategists warn that the yen's decline does not mean that deleveraging is over or "that risk appetite has returned unbridled." They expect trading conditions to remain choppy, and investors will focus on how well Asian equities markets hold up overnight.

Miller Tabak's Tony Crescenzi, in a note, said he sees signs the Fed's commercial paper program starting to work, and he expects the trend of falling Libor to continue. Libor is the bank to bank lending rate. "Libor is being pressured lower by the launch of the Federal Reserve's Commercial Paper Funding Facility," he wrote.

Crescenzi also said the Fed's facility is helping free up money for the inter-bank market by reducing corporation's dependence on bank credit.

Tuesday's trading saw strong buying on decent volume in some downtrodden names, including the financial stocks.

Earnings Central

Some big earnings are out Tuesday including Procter and Gamble, Kraft, Comcast and Aetna, as well as Hess, Tesoro and Murphy Oil.

Monday's late day selloff was a stinging reminder that volatility still rules the stock market and the sellers are still in charge.

Stocks were "quietly volatile," as one trader described it, before tanking in the final minutes of the session. The Dow finished off 203, off 2.4 percent at 8175, and the S&P 500 was off 27 or 3.2 percent at 848.

Tuesday's markets will be just a variation on the same theme, but traders are now focusing on the Fed's two-day meeting, where it is widely expected to cut its target Fed funds rate by a half a point. That would make the rate 1 percent, its lowest level since 2004. The Fed is expected to announce its decision Wednesday at about 2:15pm ET.

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"We're still saying the cut will be 25 basis points, but it could be 50. We think there will be open-ended language," said Robert Harrington, head of block trading at UBS. "..It's not the end-all and be-all, but incrementally it helps."

The market expects the rate cut, but many traders like Harrington say more signs that the credit markets are healing are what's really needed to get the stock market going again.

Brian Dolan, chief currency strategist at Forex.com, said traders in all markets will be watching the reaction of equities markets to the Fed move. "Whether it will matter or not is whether the equities markets respond...If there's no relief rally, it shows this deleveraging and asset liquidation is not finished yet. Then there's more pain to come in the stock market, and that's going to keep the dollar supported and the yen supported," he said.

The dollar Monday finished at $1.2542 per euro, a gain of 0.34 percent. It was down 1 percent against the yen at 93.58. Dolan said if the dollar rallies through $1.25 per euro, its next stop would be $1.22, then possibly $1.20. For the yen, he says if it does not stabilize above 90, the G-7 could intervene. (See Currencies/forex data at a glance .)

"I don't think anyone was expecting the complete implosion of equities around the world," Dolan said. "This is very much a panic and no doubt there is some overshoot in terms of the prices we're seeing."

Stocks have taken the driver's seat in global markets. "They capture the public's imagination much more than currencies or bonds," said Dolan.

"The key is when these Asian markets show some signs of stabilization. What we're feeling is very much the redemptions and forced liquidation from hedge funds and other asset managers," he said. He added that it may be that once hedge funds deal with the month end and October winds down, the markets will quiet down.

"There is some hope with the change of month we get a little bit of a respite from this, but then you're just left with a shell shocked market," he said.

Econorama

Monday's U.S. stock market was surprisingly quiet part of the day, after a vicious selloff wracked Asian markets and left a mixed picture in Europe. The market sold off early, then stabilized until late in the day. Monday's report on new home sales was viewed as a positive by traders, but the number, like last week's existing home sales, does not mean housing prices will stop falling.

"Are you just seeing turnover because of distress sales? I don't think you can get too excited about it," said Harrington.

New data on home prices is expected Tuesday at 9am with the release of the S&P/Case-Shiller home price index. Other data Tuesday includes housing vacancies for the third quarter and consumer confidence, both released at 10am.

Earnings Central

Earnings news will continue to be important in Tuesday's session. Occidental Petroleum, British Petroleum, Valero, U.S. Steel, Martha Stewart, Whirlpool, SAP and Royal Caribbean report early in the day. DreamWorks, Apollo Group, and McKesson report after the bell.

Coca-Cola , Archer-Daniels and Deere should like this history lesson.

Even poor students of history know it never exactly repeats itself, but we all have been scratching the past for clues to guide us though the current harrowing times. So here's a historic analysis I think you'll find particularly interesting.

Think back to 1929, and you immediately think stock market crash. Ouch. Ok, that's similar to now. Next, think ahead two years into the future (that would be 1931). By analyzing stock performance, you'll see an interesting picture of investor behavior. Michael Painchaud, Director of Research and Principal at Market Profile Theorems did just that and he thinks some of these lessons are still relevant.

Painchaud looked at stocks as they made new highs after the 1929 crash. All three of those NYSE-listed stocks mentioned above were on a list of stocks that made new highs within two years of the 1929 crash. The 1929-'31 list, attached below, contains some other names you will know -- Federated Department Stores and U.S. Steel. There are others you maybe never heard of (Raybestos-Manhattan?), and some you'll be surprised by (Exchange Buffet, a vending machine cafe).

There's a heavy representation of food companies, industrials and manufacturing. Three movie companies made it too, and some old reliable utilities. You will notice that financial companies did not make the list.

"The lesson is obviously that investors had gone very defensive. Firms which tended to provide products and services which were at the very basic level of the economy did well, and there wasn't too much room for anything else," he said. But I note they bought entertainment names, too. (Do movies then = iPods, HDTV, and videogames now?)

Also, Coke wasn't the defensive name it is now. You have to assume it was more about growth.

You'll also note that there are quite a few preferred stocks. It makes sense, Painchaud said. "It's part of a very conservative investment view, and buying yield is a hedge," he said.

There are three miners, but Painchaud points out they are not defensive gold plays as you might think. "They were producing silver. It very well could have been the world was stockpiling silver for munitions for the coming war," he said.

So what about now? There was no technology-laden Nasdaq index in 1929, and Painchaud notes the biggest tech company of the time, RCA, didn't make his list. But I wondered if — as the 1920s clearly still showed the strains of America's move to an industrialized nation from a more agrarian one — could we compare that era to our transition to the high-tech era (using the 1980s lexicon)? Could tech names be the equivalent of some of the industrial names on Painchaud's list?

He agreed with my theory, but added that the tech names that are most basic may be the ones that recover first. If you use the lesson of 1929, he says you would conclude semiconductors might be on the list. That also correlates with something else he's seeing in his research: "In terms of insider activity, the semiconductors look like a buy as a group."

History doesn't always repeat itself. Your ETF wasn't there in the 1930s, and your broker wasn't putting his orders through on a computer... but some of the same psychology seems to be at work.

Painchaud's 1929-'31 list:
(divided by industry)

Construction Materials

U.S. Gypsum

Raybestos-Manhattan

Consumer Discretionary

Bulova Watch

Consumer Products - Tobacco

American Tobacco "B"

Ligget and Myers "B"

Electrical Transmission

American Superpower

Energy/Oil

Standard Oil Co. (NJ)

Entertainment

Columbia Pictures

Paramount Pictures

Loews

Food Processors

Archer-Daniels Midland

Coca-Cola

Corn Products Refining $7 prfd

International Salt

Libby, McNeill and Libby

Swift International

Industrial

American Machinery Foundry

Warren Foundry and Pipe

General Refractories

U.S. Steel

National Can

Vanadium Corp. of America

New Jersey Zinc

Novadel-Agene

Worthington Pump

Superheater

Continental Diamond Fibre

Machine Tools

Bullard Co.

Manufacturing

Foster Wheeler

Thatcher Manufacturing

Ingersoll-Rand

Deere and Co.

American Chain and Cable

Mining

Lake Shore Mines

Dome Mines

Homestake Mining

Conglomerate

Atlantic Gulf and Western Industries Pfd.

Electrical Wiring

Driver-Harris

Restaurants

Exchange Buffet

Office Equipment

Addressograph-Multigraph

Oil Field Equipment

Dresser Industries

Pharmaceuticals

Sharp and Dohme

Publishing

Curtis Publishing $7 pfd

Real Estate

Equitable Office Building

Texas Pacific Land Trust

Retail

Federated Department Stores

Transportation RR

Missouri-Kansas-Texas

Missouri-Kansas-Texas pfd

N.Y. Chicago and St. Louis pfd

Utilities

Electric Power and Light

American and Foreign Power $7 pfd

American Power and Light $5 pfd

Electric Power and Light $7 pfd

Questions? Comments? marketinsider@cnbc.com

The final week of what's shaping up to be a "black October" promises to be volatile and even scary.

Friday couldn't come fast enough for stock investors.

Thursday, like most of the week, was punctuated by wild, gut wrenching swings. Friday doesn't look like it will be much different.

The Dow ended Thursday up 2 percent at 8691, its first gain in three sessions and its fourth gain in the past 17 days. The Dow finished 172 points higher but moved in a more than 500 points range intraday. The S&P 500 was up 11 at 981. For the month so far, the Dow is down 19.9 percent, and the S&P is down 22 percent.

Energy stocks were Thursday's best performers, up 6.6 percent as oil moved higher. Oil finished at $67.84 as OPEC met to decide whether to cut production. Materials stocks were the worst performers, off 1.2 percent. Metals like copper and gold continued to sell off though grain commodities reversed some of the week's losses.

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The stock market moved in a jagged pattern, into positive and negative territory during the afternoon. Traders said hedge funds were once again selling.

"It's cross currents. They're (stocks are) heavily oversold," said Art Cashin, director of floor operations for UBS. "They kept challenging a couple of chart patterns. The oversold condition prevented them from going into the free fall they looked like they were going to go into. The next couple of days could be climactic."

Cashin said if stocks break through the lows of October 10, they could go sharply lower with the Dow possibly plunging to a new bottom in the low 7000s. If the October level is tested, and the market holds, Cashin said it could be ready to rally.

"The last Monday of October is one of best days to find a bottom," said Cashin, a veteran NYSE floor trader. Why? "History tells us that."

"Traders always look to that day with a friendly eye. It may turn out that Halloween is the least scary day of the year," Cashin said.

Progress in the credit markets stalled a bit Thursday, as dollar overnight rates inched higher for the first time in two weeks. Traders have said the improvement would be slow and could have setbacks though they remain encouraged.

Another concern was that new data on commercial paper showed that the market contracted for a sixth week to its smallest size in 3-1/2 years. Outstanding CP fell to $1.449 trillion. The Fed though launches its program to purchase high-quality three-month CP on Monday.

Econorama

On Friday, existing home sales are due at 10 a.m. The consensus is for 4.93 million, or an increase of 0.4 percent. Earnings reports are also expected from Exelon, Fortune Brands, Gannett, LM Ericsson, ITT and Ingersoll-Rand, to name a few.

Stocks are trapped in a volatile selling wave, driven by fears of the weakening global economy even as credit markets continue to show signs of improvement.

Traders say fund redemptions continued to ripple through the market Wednesday, and some buying activity was the result of short covering. Bargain hunters are in the market, but traders say they are not seeing huge new commitments.

Traders Thursday will be watching the weekly jobless claims report at 8:30 a.m. and another long list of major corporate earnings reports. Union Pacific, Altria, Bristol-Myers, UPS, Eli Lilly, Dow Chemical, TD Ameritrade and Starwood Hotels report ahead of the bell. Microsoft, Aflac and Burlington Northern report after the bell. (See more below.)

Citigroup chief U.S. equities strategist Tobias Levkovich says investors should be dipping into the stock market right now.

For many investors that's a hard move to make, after the market has delivered such stinging losses and continues to trade volatiley "You don't' compound one bad decision with another one, which is sell at the bottom," Levkovich said in a telephone interview.

"If you're waiting for that perfect time to buy and that perfect time to sell, you're going to be waiting for Godot," he said. "Nobody rings a bell at the bottom. Nobody rings a bell at the top."

Levkovich did not say whether stocks have hit bottom, but he does say investors should nibble selectively in several key sectors. His favorites include health care, telecom, some retailers and diversified financials. "I like insurance. They are so beaten up," he said.

He also likes semiconductors, especially since they are paring back on capacity. "When you don't build new fabrication facilities, you end up having less capacity and better pricing and the stocks have been beaten up," he said.

Levkovich said he is underweight utilities, no longer favors pharmaceuticals and does not think consumer staples are a group to buy. "Consumer staples is not a place I want to hide out any more. They acted very defensively and now there's currency risk," he said.

The strengthening dollar has now made some companies with strong international profits vulnerable, he said. Levkovich also said he doesn't see global growth trades as a buy though he has become more interested in the industrial stocks.

Levkovich said the market needs to overcome several hurdles before it can start to move higher with any confidence. "What we really need to see are a few things -- credit markets stabilizing, interbank lending picking up for more than a day or two," he said. Earnings expectations also need to come down. "We need companies clearing the deck on expectations. They're still too high for 2009. You're also going to need to see more data saying inflation is not a threat, and to some degree you're going to need to see actual (bailout) activity as opposed to discussion around the activity by authorities."

He said there's an analogy between the broken credit markets and a bicycle with a broken chain. Without the chain, you can peddle furiously but ultimately you'll have to put the chain back on and get your hands covered with grease. "Right now, we have authorities standing around looking at the broken bike," he said.

Levkovich said there's still a case to be made for the market to rally into year end.

"There's a lot of cash on the sidelines. This is more than a financial crises. There has be some invigoration of confidence," he said. "I'm not saying whoever wins the election could be that factor but having uncertainty removed could help."

• Four Reasons Stock Market Hasn't Reached Bottom Yet

Questions? Comments? marketinsider@cnbc.com