Ever Wonder Why Stock Markets Tend To Dive In October Of Every Year

Posted By on September 29, 2010

Thoughts from Art Cashin on the floor of The New York Stock Exchange

“The months of May and October have always broken hearts on Wall Street.  In fact when I studied under the Moose Head (at Eberlins) it was a frequent subject.  Prior to 1929 it was almost logical.  We were an agrarian society and huge chunks of money shifted from city banks to country banks (and vice versa) at planting time and harvest time.  The resulting temporary dislocations in bank assets caused spasms of tight money and down drafts in the stock market.  But after 1929 it kept happening even though we had more smokestacks than haystacks.  Additionally, the creation of the Federal Reserve in 1913 should have smoothed out any imbalances in money shifts.  Anyway it makes the debate interesting.”

This year we have to take seasonal patterns with a grain of salt that you would need a wheelbarrow to carry.  The Rosh Hashanah seasonality didn’t work.  The Autumnal Equinox seasonality didn’t work.  And, we’re on the mark to close out the strongest September since 1939.  Sometimes the groundhog strikes out.

Why the change this year you may ask…..It would apear that the government has much more control of the markets then it ever had before in the age of the new normal!

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