That is a fantastic query proper now as many people nonetheless stay fairly nervous. The Volatility Index ($VIX), for instance, gained greater than 10% as we speak, regardless of a minimal decline within the S&P 500. It is a sign that the inventory market possible will not deal with dangerous information very properly. Subsequent week, we have now the September nonfarm payrolls. And earnings season is about to kick off in only a couple weeks, when the banks start reporting. May we see an earnings warning or layoffs from an enormous identify or two? We do not know, but when we do see dangerous information, it is fairly potential we see one other leg decrease in October.
However may it crash?
Nicely, first we might should outline “crash.” Over the previous 74 years, the S&P 500 has seen a drop of 9% or extra in a calendar month simply 17 instances. That is 1 month-to-month drop of 9% or extra each 4 years or so. For those who’re searching for the beginning of a 20% to 30% drop, or much more, I might say the prospect of that’s extraordinarily slim, most likely negligible.
Let’s check out the two worst October declines in U.S. historical past. First, there was October 1929 – The Nice Despair:
October 1929 started the most important decline in U.S. inventory market historical past. The decline did not discover a backside till almost 90% of the inventory market’s worth was misplaced.
The opposite October decline that provides the month its dangerous identify was October 1987 crash. Keep in mind Black Monday? For those who weren’t investing again then, that is what the chart appeared like:
The 1987 “crash” occurred over the course of some weeks, not a couple of years like in 1929. There have been different tough Octobers, however they merely have not been as catastrophic because the 1929 and 1987 variations. In reality, earlier I discussed that we have seen calendar month declines of 9% or extra 17 totally different instances since 1950. October has performed a job in lots of of those. Moreover, there have been 14 bear market declines (losses of 20% or better from all-time highs) since 1950 and October has performed a really attention-grabbing function in these too.
So what would possibly we count on in October 2024?
For those who’re all for inventory market historical past, then EarningsBeats.com is the fitting place to get your data. It is attention-grabbing that the “Go Away” month (Might, in response to the Wall Road “specialists”) has by no means had a kind of 9% or extra calendar month losses. Can also has by no means began a bear market, but the underside of 1 was present in Might. You’ll be able to’t belief the historic data that you just get from the media, however I can promise you that the knowledge that we offer at EarningsBeats.com is 100% factual and ZERO p.c false or deceptive. As a working towards CPA for 20 years, I can analyze and report knowledge.
Tomorrow morning, on Saturday, September twenty eighth at 10:00am ET, I will be internet hosting a FREE occasion, “Historical past of Market Bottoms.” I need all of you to know historical past the best way we do at EarningsBeats.com. This occasion does require registration. To get extra data and to save lots of your seat, REGISTER NOW! For those who’re studying this text and it is past Saturday 10:00am ET, no worries. Anybody who registers (even late) will obtain a recording of the occasion. Lastly, we have developed an book, “74 Years of Market Bottoms”, that will probably be despatched to you instantly upon registration, so do not delay!
I am going to see you Saturday morning!
Tom
Tom Bowley is the Chief Market Strategist of EarningsBeats.com, an organization offering a analysis and academic platform for each funding professionals and particular person traders. Tom writes a complete Each day Market Report (DMR), offering steerage to EB.com members day by day that the inventory market is open. Tom has contributed technical experience right here at StockCharts.com since 2006 and has a basic background in public accounting as properly, mixing a novel ability set to method the U.S. inventory market.
Study Extra