October into November

Hello, Traders!

As we step into the last days of October, we’re in one of the most dynamic trading windows of the year. October’s closing week is often characterized by both volatility and opportunity, and it sets the stage for the start of a historically bullish period through November. Here’s what you need to know to navigate this week effectively and get a head start on November.

📉 October 28 - 31: Navigating Volatility & Spotting Key Entry Points

1. Earnings Season in Full Swing

October is earnings season, and it’s known for its dramatic market swings. Mutual funds generally sell underperforming stocks by October 30 for tax purposes, which can lead to additional downside pressure. This earnings volatility, combined with mutual fund selling, makes October’s final week tricky yet potentially rewarding.

2. Look for Late October Entry Points

Historically, the last 3-4 days of October are great for spotting long-term opportunities, especially if the market remains steady. These days often reveal undervalued stocks with strong fundamentals—ideal candidates for long-term positions.

3. Directional Bias: 60/40 Bullish/Bearish Bias

We can expect a 60/40 chance of bullish/bearish bias during this final stretch of October. Historically, this setup aligns with the market’s gradual stabilization as selling pressure wanes. If we see no major October crash, this bias could be adjusted even further toward bullish as November begins, based on early-November bullish trends.

📈 November 1: Entering a Historically Bullish Period

1. Seasonal Upside Bias into Early November

November historically opens with strong upside momentum, especially in the first 2-3 weeks. This is when traders can look for sustained upside movement across key sectors like tech, retail, and consumer discretionary. These sectors benefit from year-end consumer spending and heightened investor sentiment as holiday shopping gets underway.

2. Shift to an 80/20 Bulish/Bearish Bias

If the market closes out October without a major crash, November often rewards a shift to a 80/20 Bullish/Bearish probability ratio. The November rally often aligns with continued positive earnings reports.

3. Sector Focus: Retail Stocks & Holiday Momentum

Retail stocks frequently rally heading into the holidays, making them a strong sector to watch as November begins. Look for opportunities in both large and mid-sized retail companies, as early holiday sales projections tend to boost this sector. Additionally, energy stocks may also see positive movement due to seasonal demand increases.

Now, onto the trends…

Seasonal Trends

Earnings Trends

That’s all for this week’s issue. October’s final days and November’s start offer a powerful setup, so keep your strategies focused, and make the most of this seasonally favorable period!

Happy Trading

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