Posted in
Big Picture
By: Tom Gentile
on September 29th, 2023
Bullish options traders had a challenging past couple of months. September played out as it typically does and as the seasonal patterns in my tools showed they were likely to do and that was trade down.
This article will wrap up my final thoughts on this and look forward to what may be a contrarian, bullish view, for October.
The end of the calendar third quarter is wrapping up this week and there is no hiding from the fact the market had a down month for September.
October Reputation
If you were to ask your friends’ family and even research online people’s expectations for the markets for the month of October there is a strong likelihood you will hear them say it is going to be a down month.
You may even hear October is a bad month for the markets and they will cite all the different market corrections or crashes, such as the 1907 panic,. Or other so-called ‘black days’ like Black Tuesday, Thursday, and Monday in 1929, and Black Monday in 1987, when the Dow declined 22.6%,
I recently read an article at CNBC.com where I believe it was Jim Cramer who said, and I paraphrase, the worse September is the better October can be.
Further online research will show you that October over the past 100 years has actually ended up net positive despite all these crashes.
This could be a reason – not THE reason, but one of many contributing factors as to why September is so bad. It could be that investors and money managers are selling out of many of their positions in advance of what they deem is a bearish month of October to come.
An interesting point to look over is the 4 best performing months are July (20.5% annualized), April (16.8%), December (15.6%) and January (14.4%).
December and January are upcoming months, and the 4th quarter is usually a positive quarter. October is the month to kick off the last calendar quarter and if you look at my seasonal data, Money Calendar, it shows a majority of candidates with bullish patterns start dates are in October.
In fact, I posted a calendar view of Money Calendar in a previous article to you all showing that every day in October has the majority of candidates for each day have bullish patterns.
October Outlook for the Markets and How the Month Could Bode Well for Bullish Options Traders
Since 1928, stocks have, on average, risen in the month of October by more than 0.6%.
They might seem like a great gain, but it shows October is not as bearish as most everyone says it is or will be.
My buddy Chris Johnson and I discuss this in greater detail in our recent podcast. In fact, we just completed it today and you can watch it here:
If you all haven’t subscribed for free to my YouTube channel, https://www.youtube.com/@TomGentileTrader, you haven’t been notified of this podcast and I encourage you to do so to be notified and catch this info as timely as possible.
Challenges to the seasonality are higher interest rates, a pending recession, the UAW strike and more.
Watch my podcast and hear what Chris and I have to say and how we want to educate you on ideas for options traders to consider in the coming months, namely October.
App: Toms Option Tools
Toms Option Tools scan the markets for bullish and bearish trade opportunities using our proprietary scans and strategy algorithms. TTR Darknet finds bullish entries based on triple stack channel collisions. Money Calendar identifies seasonal patterns with at least 90% accuracy looking back 10 years. Weekly Cash Clock finds short term opportunities that last a week on average. Microcurrency Trader applies Darknet technology and moving averages to cryptocurrencies. Velocity Trader utilizes volume spike and Velocity indicators on custom stock lists. Quantum Scripts scans the markets for momentum acceleration signals and employs Quantum noise filters. Optimal Trader finds directional pre-earnings opportunities that are optimized for entry date, stock movement, and volatility surge. My Trades tracks the profit/loss of your trades, displays stock charts and risk graphs, creates new trades, and edits existing trades. Morning Report provides top 10 option rankings in 6 categories each day.
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