Throughout history, October is notoriously known as a month of considerable volatility in the financial markets. However, when we examine the performance of the S&P 500 and its evolution, we can identify an intriguing phenomenon.
Historically, when the index records significant growth, ranging between 10% and 20% by the end of September, this often anticipates an even more promising fourth quarter.
This particular setup is worth noting because, on average, since the 1950s, the S&P 500 has experienced an additional increase of 5.5% in the last quarter of the year in similar situations. These numbers not only provide a positive view of the market but also point to the consistency of this phenomenon over time.
When we analyze the history of these specific circumstances, we discover something truly remarkable. In 19 previous instances when the market aligned with these characteristics, in an impressive 16 of them, the S&P 500 achieved positive returns by the end of Q4. This historical record gives us good reason to believe that the next three months could be promising.
While October is notoriously volatile, past trends indicate that, overall, November and December have historically been strong. This combination of factors gives us ample reason to eagerly anticipate the unfolding of the year's final stretch, with the hope that growth opportunities continue to materialize for investors and market participants.
