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Typical Octoberphobia! Brace Yourself


High interest rates have spooked the market in the very
scary market month of October. But as we’ve told you: October is a bear-killer,
bargain month and turnaround month. It looks like the anticipated correction is
now upon us. As of today’s close, from the recent summer highs DJIA is –8.0%,
S&P -8.5% and NASDAQ -9.9% respectively.

Everyone has been chattering about the coming big Q4 rally
and how October is when stocks selloff. Well, here you are. Seasonal patterns
have been tracking all year. And we’ve been on the sidelines in short term
bonds and cash since our late June MACD Seasonal Sell Signal. Our Seasonal MACD
Buy Signal is setting up extremely well. To Wit: Buy In October and Get Your
Portfolio Sober!

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Over the last twenty-one years, the full month of October
has been a solid month for the market, ranking #2 for DJIA and NASDAQ, #4 for
S&P 500. DJIA, S&P 500, NASDAQ, Russell 1000 and Russell 2000 have all
recorded gains ranging from 1.3% by Russell 2000 to 2.2% by NASDAQ. But these
gains have come with volatile trading, most notably during the early days of
the month.

October has opened softly with modest average gains on its
first trading day. On the second day, all five indexes have been weak followed
by a rebound on the third trading day before additional weakness pulled the
market lower through the seventh trading day. At which point, the market has
historically found support and begun to rally through mid-month and beyond.

In pre-election years since 1950, October has been stronger
in the first half of the month and weaker in the second half. October 1987’s
substantial declines heavily influence the pre-election year pattern.

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