Five Historical Signals Point to a More Optimistic October

Andrew Rocco argues that historical patterns and company fundamentals offer reasons for optimism this fall, despite a confusing market backdrop. The Nasdaq 100 ETF, QQQ, gained 3% in September and was less than 1% from its all-time high, he noted.

One signal is weak market breadth: fewer than 42% of S&P 500 stocks were above their 200-day moving averages, according to Bluekurtic Market Insights. The firm said the S&P 500 had been higher five days later in all prior cases.

Rocco also points to Micron’s latest earnings report, which included record profits. The company was generating $553 million in revenue per day, he wrote. Separately, data from Ryan Detrick of Carson Investment Research identifies October as the strongest month in the midterm-year seasonal calendar, with November second.

On interest rates, Charlie Bilello of Creative Planning said the 30-year Treasury yield had been higher than its current level every day in the 1980s and on 92% of days in the 1990s. Rocco notes that the source describes those decades as strong periods for U.S. equities.

Finally, Rocco says valuations remain reasonable for several large technology companies. Alphabet, Meta Platforms and Microsoft each had price-to-earnings ratios below 30, according to the article.