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
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