Posted in
Education
By: Tom Gentile
on October 4th, 2024
Different Time Frame Views in your Technical Analysis Can Help Find Better Opportunities
Let me start with my outlook for October. October is one of the most fascinating months in the markets.
The month of October for the financial markets is famously known for some of the most significant market crashes in history – the Panic of 1907… 1987’s Black Monday… and, of course, the 1929 crash that triggered the Great Depression.
But know this. It isn’t always a bad month for stocks – in fact, October has tended to be a net positive month, on average, over the past century or more.
Look at my 40–60-day pattern view on the Money Calendar and you can see quite a lot of bullish patterns with October start dates.
Two Different Time Frame Views for Broadcom, Inc. (NASDAQ: AVGO)
Long time student/subscribers of mine know I like to look for 20-30day patterns. What I have found through September and into October there was some seasonal bearishness that reared up and where one could trade bearish option positions, I expanded out my number of days in the pattern research and found a great many more bullish option opportunities.
The choice everyone had was to trade shorter-term bearish options or trade these slightly longer patterns and look for nice bullish moves. I stuck with the latter and I will show you why below.
The above data/research I found is provided by Carson Investment Research. It shows when the markets, the S&P 500, specifically has a gain for the year up until October of greater than 20% the month of October itself tends to have a down month.
Once again you, as options traders have the choice to find shorter-term bearish option opportunities through October or do like I and my team are doing and looking for profit opportunities that should happen further out in time.
My opinion is we have to take a longer view of the markets – as we’ve been doing since the beginning of September – to find opportunities now that will bring profits in November and December, both of which are better environments for stocks.
To back that last comment up. Look at the Q4 return in that data table I just highlighted. In each of those years all but two of them had a ‘positive’ Q4 return. This to backs up my assessment that I want to be looking at the longer-term Money Calendar patterns, those of a 40–60-day duration for bullish tradeable opportunities.
You can see the last / or most recent year % result showed a 22.15% gain, (that was for 2023).
This look was for results of a September going in to mid-November view.
It is still a view of what a 60-day pattern result for each of the last 10 years resulted in.
As stated I changed my outlook or research view for stock that have a 40-60-day result, and this is what came about for AVGO.
Take a look at the next image for AVGO but know that this is a look for results on AVGO with a start in October with an end date around or near the end of December.
You will see a much steeper regression line and the % gain shows a higher result. This tells me if the pattern plays out in a similar fashion this year, I would want to have considered trading AVGO in October out the 60-days.
Keep in mind I am just comparing the % gain in a scenario trading AVGO from October – December which last year resulted in 36.18% roi versus a September to November run resulting in a 22.15% roi; both from last year 2013.
Do your analysis and talk it over with your broker if you both want to consider AVGO as I am NOT recommending this stock nor am I saying it will or won’t work out.
My job is to educate you on how to use my charting tools and look for opportunities for myself. If you like the education and the tools and wish to pursue them I invite you to continue to subscriber to my YouTube channel: https://www.youtube.com/@TomGentileTrader and my software: 14-day
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