Halloween Madness Tears Stock Market to Shreds
Halloween Madness Tears Stock Market to Shreds by David Haggith for The Great Recession
Investors will start to realize the economy is not recovering in August, I said. As result, the stock market will break sometime in August or September, I said. It will likely experience an even bigger plunge as an October surprise, I said, because something about October loves a Halloweenish surprise for stocks.
The bull gets ripped to shreds
The post-COVID market put in its last peak right as we shifted from August into September. September was recognized as a generally bad month for stocks. Stocks took another plunge in October, diving almost 2,000 points on the Dow in the final week, making October an even worse month for stocks than September was. Two months in a row of back-to-back declines.
While October’s surprise did not run as deep or surprising as I was thinking we’d see, it nevertheless was enough to break a few records.
Zero Hedge referred to it as “Shocktober,” claiming stocks had experienced their worst pre-election plunge in history. It was also their worst drop since the horrendous March 2020 crash where one had to look back to events like 1929 to find a crash that went deeper though not steeper.
September and October experienced week after week of drawdowns. The few good weeks in the mix were not enough to offset the much worse bad weeks.
Or as The Wall Street Journal put it,
The Dow Jones Industrial Average declined Friday, closing out its worst week and month since March in the final lap of the presidential race.
And March was as horrible as hell, itself, so saying it was the “worst since March” is like saying “it was my worst date since my night out with Freddie Krueger.”
The Journal noted that investors had been spooked by rising COVID cases and the failure of stimulus measures to make passage in congress and had begun to feel a little queasy about earnings and especially forward projections on earnings.
Yet, who couldn’t have seen that coming? Those were some of the black swans I and many others enumerated as being likely to light upon us at this time of year months ago. (“Black swans” in that many were blind to them by choice — unwilling to think about them.) The dim stock investors in their madness blithely ignored everything they didn’t want to hear. These things, I said, would eventually catch up to people in such deep denial. Reality wouldmake itself known and crash the Halloween party like the Grim Reaper.
Bloomberg noted the worst performance for the final two weeks of October since the 10.9% crash in ’87.
Intraday on the final trading day of October, both the Dow and the Nasdaq had fallen into full correction, but each recovered just enough ground via a spike in the last minutes of trading to step back outside of that by day’s end. The Dow ended clinging by its teeth to its 200-day moving average and the S&P and Nasdaq ended panting on the support of their 100-day moving averages.