It’s officially been 39 years since Black Monday erased a fifth of the stock market’s value in a single trading session.
On October 19, 1987, the Dow plunged 22.6% and the S&P 500 dropped 20.5%, with both numbers still the worst one-day moves on record.
It makes sense why October has a reputation for crashes, given that other sizable sell offs have transpired the same month:
The Panic of 1907 started in October, when the Knickerbocker Trust suspended operations on October 22
The Dow fell 12.8% on October 28, 1929, and another 11.7% the next day
The Dow fell 7.2% on October 27, 1997, triggering market-wide circuit breakers for the first time
The S&P 500 fell 16.9% in October 2008
Plus, five of the S&P 500's 10 worst days since 1950 came in October, as did its two worst months.
The repercussions of these events tell a mixed story.
The S&P 500 was 23% above its Black Monday close a year later, while the Dow didn't regain its 1929 peak until November 1954.
Now, none of this makes October a bad month. Since 1950, the S&P 500 has averaged a 0.9% gain in October and finished higher 59% of the time.
September typically fares much worse. It's the weakest month on average, down 0.6%, and it’s finished higher just 45% of the time.
Indeed, October has been even better in midterm election years like this one.
The S&P 500 has averaged a 3% gain in midterm-year Octobers and climbed across 14 of 19.
As I’ve written about in recent weeks:
The S&P 500 has averaged a 6.6% gain in the Q4 of midterm years since 1950, the best in the four-year cycle
Q4 was positive in 16 of 19 midterm years
The index has averaged a 31.8% gain in the 12 months after its midterm-year low
Since 1950, the S&P 500's fourth quarter has averaged a 6.6% gain in midterm years, the strongest of the four-year presidential cycle.
This year, the S&P 500 bottomed on March 30 and has climbed nearly 21% since.
So as much as you might read about this month seeing history’s biggest crashes, October has much more frequently been the start of a strong finish than not.
Elsewhere
📉 Chip stocks just logged their longest losing streak since 2008. The Philadelphia Semiconductor Index fell 3.83% Friday for its eighth straight decline, and it has lost 16% since its last gain on October 6. (Yahoo Finance)
🏦 Fed Chair Kevin Warsh declined to signal his next move on rates. "I don't prejudge meetings," he said Friday, and Goldman Sachs economists expect a pause at the October 27-28 meeting followed by a second and final hike in December. (CNBC)
🤖 Microsoft reportedly pulled out of a UK data center deal with Nscale. Microsoft was set to be the anchor tenant at a Loughton site in Essex, a blow to the Nvidia-backed company after it filed for a US IPO last month. (Yahoo Finance)
Rapid-fire
South Korea's finance minister says the chip boom will last at least through 2027 (CNBC)
China proposed export curbs on 12 key solar manufacturing technologies (Yahoo Finance)
Berkshire Hathaway shares hit their highest level since Buffett said he would step down (CNBC)
The market still thinks the Fed will hike interest rates again (Searching for Signals)
This beat-down retail stock could surge 137% now that it got a new turnaround CEO (Best Ideas Club)
There's a 47-point gap between the best and worst Magnificent 7 stocks this year (Opening Bell Daily)
Full Signal
I joined Anthony Pompliano on stage at the Silvia Investor Summit in New York for a special live episode. We covered the charts driving markets, midterm-year seasonality, the bull and bear cases on AI, and the four stocks I'm bullish on right now.
Tune in on Spotify, Apple Podcasts, or YouTube.
On this day
🗓 October 19, 2021: The ProShares Bitcoin Strategy ETF began trading as the first US bitcoin futures ETF. About $1 billion worth of shares changed hands that day, one of the strongest ETF debuts ever.
Last thing
💡If you find this newsletter valuable, you can help shape its future by taking our 2-minute reader survey. Your feedback directly influences our content.
