October has a well-deserved reputation of being a volatile month for the market. Historically, it is the second-worst performing month after September, and it has had its share of market meltdowns (1929, 1987). I don’t foresee anything that dramatic this October after the long rally. However, I think it is going to be a challenging month for investors for a variety of reasons. [Below are 10 reasons to be wary this October in particular.] Words: 498
So says Bret Jensen (http://www.bretjenseninvests.com/) in edited excerpts from his original article* posted on Seeking Alpha under the title 10 Reasons To Be Wary Of October.
Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.
Jensen goes on to say, in part:
10 reasons to be wary in October:
Third quarter earnings season just kicked off. This is expected to the first quarter since 2009 where S&P earnings are down Y/Y. Alcoa (AA) was the first Dow component to report Tuesday morning. Even though it beat on the bottom line, the shares are down some 4% today on the company’s poor guidance on worldwide demand. Expect this to be a theme this quarter.
Chevron (CVX) also just warned that its third quarter results will be substantially lower than second quarter results. This is going to put a chill on big oil stocks, which will be a big negative for overall S&P earnings and market sentiment.
Insider selling in early October has accelerated significantly from where it was in early September.
Optics in Europe are going to get worse during the month. A general strike is called in Greece for next Thursday to coincide with a meeting of EU leaders. Should be a fun video from CNBC during trading hours next week.
Speaking of Europe, the IMF just substantially cut European growth prospects.
The IMF also warns that banks may have to sell 4.5T euros worth of assets if the European Union cannot stem this fiscal crisis.
Finally, nothing in Spain has been resolved. This is a huge overhang on the European and our market.
The fiscal year end for many institutional fund manager ends October 31. Most are behind their benchmarks which has been major driver of the “buy the dips” mentality of the last few months (The Dow has not had a 1% down day since June 25). This support will go away soon.
Romney has taken the lead in the presidential polls. Although I believe a Romney victory would be a huge positive for job growth, the market is likely to rightly worry about the continuation of Helicopter Ben’s QE efforts, which have been a major support for the market.
Despite the onslaught of regulations over the past four years, little has been done to prevent the next financial crisis. The former inspector general of the TARP program recently stated that it is a matter of when, not if, the next financial debacle hits.
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Prudent investors should raise cash if they don’t already have a good reserve. Aggressive investors should add to their short positions. Patient and opportunistic investors should look forward to lower entry points.
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Editor’s Note: The above post may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
In the financial world, the month of October is synonymous with stock market crashes. So will a massive stock market crash happen this year? You never know. Hopefully we’ll get through October (and the rest of this year) but, without a doubt, one is coming at some point. The truth of the matter is that our financial system is even more vulnerable than it was back in 2008 and, as such, many financial experts are warning that the next crash is rapidly approaching and that those on the wrong end of the coming crash are going to be absolutely wiped out. Let’s take a look at some of the financial experts that are predicting really bad things for our financial markets in the months ahead. Words: 1634
What’s the first thing that comes to mind when investors hear the word October? Ghoulish Halloween costumes? Nope. Memories of World Series heroics from slugger Reggie Jackson, better known as Mr. October? Nope. Stock market crashes? Bingo! Words: 1477
Based on the latest S&P 500 monthly data, [my analyses indicate that] the market is overvalued somewhere in the range of 33% to 51%, depending on which of 4 indicators I used. This is an increase over the previous month’s 31% to 48% range. [Let me explain the details.] Words: 475
“Portfolio managers have been swayed by hope over experience” when it comes to anticipating the effects the fiscal cliff will have on markets. Investors aren’t giving as much attention to the fiscal cliff as they should be, and that may be helping to set the markets up for a repeat of last year, when the debt ceiling negotiations sent stocks plummeting.
Back in April and May, it looked like the economy was falling apart, the euro was going to come unglued, and stocks were going to plunge. Sentiment was extremely bearish and volatility was jumping. Now in August, you can’t find a bear anywhere on Wall Street! Me? I continue to be worried about the likelihood of a sharp market decline this fall for several reasons which I share with you below. Words: 495
The six factors discussed in this article suggest a near-term peak for equity markets, avoiding fresh exposure to equities at these levels and selling some of one’s equity holdings. Long-term investors can still ignore the volatility and buy quality stocks, however, it would make more sense to buy the same stocks after the markets decline 10%-15% than buying it at current levels. [Let me explain more fully.] Words: 665
Renewed leadership by the sectors that stand to benefit most from a stronger economy and profit growth down the road…could be one of the best indications that perhaps the worst is indeed behind us and the rally has more room to run. However, if these cyclical sectors fail to participate more fully, that would be a signal of more potential trouble ahead. [Let me explain.] Words: 840
Harry Dent, the financial newsletter writer and CEO of economic forecasting firm HS Dent, has one of the most bearish calls on stocks we’ve heard in a while. Appearing on CNBC yesterday, Dent explained the demographics-driven thesis behind his Dow 3000 call.