EB Daily Market Report - Friday, October 27, 2023

John Hopkins - October 27, 2023

Dear Members.

I'll be brief today with Tom Bowley back to his regular schedule on Monday.

The NASDAQ is the only index with gains today but well off of its session high as we end a rough trading week. For sure the week fell right in line with historical tendencies for this period of the year and now we'll see if that is about to change. In fact, Tom laid out some extremely useful historical data in this morning's EB Digest which I'm including below in case you missed it.

After today's close, we start not only the strongest 9-10 day stretch of the entire year, but we also start the best 2-3 month period as well. But let's focus on this short-term bullish period. Here are the annualized returns by calendar day of the S&P 500, based on data since 1950:

October 28th: +126.68%
October 29th: +77.49%
October 30th: +55.50%
October 31st: +15.80%
November 1st: +42.60%
November 2nd: +71.58%
November 3rd: +95.26%
November 4th: +52.85%
November 5th: +72.97%

Study those numbers and consider that the average annual return on the S&P 500 since 1950 is roughly 9%. Every one of those calendar days absolutely blows away that 9% "average", with perhaps one exception on October 31st. No other day is even close, however. There is not another 9-day period at any point in the calendar year that comes close to this historical performance level. There are so many historical tendencies to be aware of in order to trade and/or invest successfully, but this is certainly one of them. I'm not saying we cannot move lower over the next week, but if you do bet against history, just realize you're taking on a significant amount of risk.

In the meantime, the S&P has put in a lower low today with 4103 the next key level of support. Let's see if that holds and then re-examine next week as earnings season kicks into high gear.

At your service,

John Hopkins