October has killed another bear | Cliff Droke

From Safehaven.com:

October has a tendency to be a “bear killer.” That is, in years when the stock market has been in decline heading into October, the month of October more often than not reverses the decline, at least temporarily. In the years that I’ve been writing a financial newsletter this was true in the following Octobers: 1998, 1999, 2001, 2002 and 2005.

Since the rationale behind the May-September mini-bear market was the economic situation in Europe, let’s start with some currency considerations. Since the ongoing rally has been primarily currency driven, it stands to reason that any continued weakness in the dollar and strength in the euro will benefit equities. The previous 20% decline in some major market indices from May to September was largely the psychological result of investor liquidation of stocks over fears relating to the deterioration in the Greek debt situation.



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