The Stock Market Sharky October by Stockmaxim Fund Management Company

The Stock Market Sharky October by Stockmaxim Fund Management Company

The Stock Market Sharky October by Stockmaxim Fund Management Company

We all know, maybe some of us for sure knows that the month of October is dangerously sharky when it comes to stock trading. Venture into the unchartered October waters without the right aid and you are bound to doom, drown and become shark munch.

Okay, metaphors apart, let us come to the point. In the Stock market or rather the overall financial markets are unchartered in October. Adding fuel to the fire are the cataclysmic events such as Hurricanes and tornadoes and the looming fear of World War 3.

I am not talking about the market movers and the leviathan investors who do not seem to bother losing a couple of millions on the way. I am talking about you and me, small-scale investors and traders who are expandable by the elites.This week, Wall Street will kick off Q4, indexes trading at their all-time highs and after having recorded solid performances in Q3. Even though everything was against September in terms of historical precedent, this time around the month gave the market its best performance since 2014. This September saw the market tacking on gains of almost 2%; the NASDAQ and the Russell 2000 shined, each recording historic highs.

Despite September historically thought of as the weakest month of the year, October is the most volatile – a month of implosions on the one hand, but on the other, one also known for its ability to kill bear markets! Historically, the first days of October have been strong – and when considering that the leading indexes are currently trading at a high and that investors didn’t have to swallow a bitter pill in the form of a dismal September, there are good chances we’ll see a continuation of the positive movement into this coming week.

Hurricanes Harvey and Irma stand to make a comeback this week, surfacing in most of the economic figures that will be released; expectations have the back to back natural disasters giving car sales a boost, but hurting September’s employment figures that will be released on Friday. Likewise, traders will continue to keep their eyes peeled on the guidance from companies whose sales and earnings figures could have been dented by the latest storms.

The historical tendency towards weakness in September didn’t play out this year but hopes are high among traders that volatility will finally pick up in October. Unfortunately for the bears, a rise in volatility as far as 2017 goes would seem to favor an uptick in the market rather than it losing ground.

The most important thing for us to internalize from the month of September is that it’s important to stay open-minded, rather than rigid and unbending. For the dogmatic bears, it was particularly difficult seeing that they continue to believe that warning signs from the past are still valid in our current market environment.

There’s no doubt that the dynamics of the market have changed significantly over the last few years and that what’s driving the market now is entirely different than the forces doing so in the past. Bad news a plenty reared its head in September, though the market ignored each and every new curveball: the Fed tightening its stance, hurricanes which sowed utter disaster, scandals galore from the West Wing and a tax plan unanimously perceived as deemed to failure from the moment it was announced in its current iteration.

The big lesson the market just taught us is that it’s a mistake to be unwilling to budge in your approach! You need to be ready to adapt and change when the conditions change and in most situations, these conditions are caused by price movement and not by the news!

I, like everyone else on the market, have no idea what’s going to happen in October. The bears will continue to expect the market to peak before taking a turn for the worse – and they’ll give us seemingly endless reasons why that’s what’s going to happen. The bulls will demonstratively ignore their every claim while staying focused on the positive price movement. It would be insane to forecast what’s going to happen when push comes to shove. The best tack now is to keep an open mind. Be vigilant and understand what’s causing price movement and react the moment conditions change. If you do that effectively, you’ll succeed in routing the market!

We at Stockmaxim will swim the unchartered and dangerous waters carrying your portfolio above our heads to the safe shore.

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