October surprises in the stock market usually mean bad news for the bulls.
At least that’s the popular notion about the month.
After all, October has a solid reputation for being associated with stock market disasters.
History In The Making
There was the October surprise of the historic stock market crash in 1929, of course.
And the back-to-back October massacres of 1978 and 1979, as well as the major crash in 1987.
They all took place in different Octobers, just like the market plunge on Friday the 13th in 1989, the staggering 554-point drop on October 24, 1997, and the acceleration of the last big market crash in 2008.
October Surprises That Aren’t Bad News
But not all Octobers wind up bringing bad news for the stock market.
In fact, some Octobers during the past 60 years have been extremely positive, at least as far as triggering positive trend reversals have been concerned. There have been a dozen times when stock prices were in a bearish sell-off, and the downtrend came to an end during the month of October.
A Trading High and a Solar Eclipse
The first example comes from 1946.
In that year, the Dow Industrial Average hit a trading high on May 29, which was the eve of a powerful solar eclipse. The decline that followed that eclipse pulled stock prices lower by more than 24% over the coming months, until the market found a bottom on October 10.
Three Months with the Bears in Charge
In 1957, Mercury was just entering the sign of Leo at the Full Moon in July when the market top took place. A decline of more than 19% followed, with the sell-off lasting until October 22.
A 14% Market Loss Ends in October
Three years later, a market top at the Full Moon on June 9, 1960 led into a decline of almost 14% before a trend reversal on October 25 defined a trading bottom, with Mercury stationary and about to go retrograde.
Ending the Plunge of 1962
Trading had just gotten underway for the year on January 3, 1962 when Saturn entered Aquarius and the market began a fierce decline. It plunged by more than 26% before a reversal at the Venus retrograde station on October 23 defined a double bottom in the market trend.
Trying in Vain to Break 1000
In January, 1966 the Dow Jones Industrial Average managed to trade above the magic 1000 mark on an intra-day basis for two consecutive days, but failed to close at that level both times. Then on February 9 and 10, the Dow again traded above 1000, but also failed to maintain that price level at the close. Instead, the stock market went into an extended decline after its failed excursion – the index lost nearly 26% by the time it found a trading bottom on October 7.
October Ends a 21-Month Bear Market
Venus was just entering Capricorn on January 11, 1973 when the Dow topped off a 13-month rally and closed at 1051.70. That high was followed by a fierce bear market, with the index dropping by more than 44% over the next 21 months.
The bloodbath finally came to an end on October 4, 1974, when the Dow hit an intra-day low of 573.22 and prices began to move back upward. That October low was tested successfully in early December, and by January 1975 a clear rebound was underway.
The Harmonic Convergence Market Top
At the stock market’s opening bell on August 24, 1987, the much-publicized “Harmonic Convergence” was underway, with a cluster of the Sun, Mars, Venus, the Moon and Mercury all within an incredibly tight orb of less than four-and-a-half degrees. This alignment was forming a loose Grand Trine pattern with Jupiter and Neptune, creating an extraordinary planetary signature of peak speculation.
Sure enough, on the following day the Dow surged up to close at the then-incredible level of 2722.42. But the celebration didn’t last long. The stock market began to lose ground, and in spite of trying to define a trading bottom in September, soon broke through support in early October. The culmination came on Monday, October 19, when the Dow gapped down at the open, went into free-fall, and lost 508 points by the closing bell.
This two-month bear market brought the Dow down by more than 36%, but once again October helped define the bottom and end the sell-off (even though it had also brought the historic crash). On October 20 the Dow closed up by more than 100 points, and a slow but steady recovery got underway.
Market Resistance at 3000
There was a Jupiter/Saturn opposition in play on Monday and Tuesday, July 16 and 17, 1990 as the Dow Jones Industrial Average tried valiantly to close above the 3000-point psychological barrier.
It closed both days at 2999.75.
That failed attempt at the peak of a tug-of-war between the planetary forces of expansion and contraction triggered a sell-off which lasted for just three months, but which brought the index down by almost 22%. A Mars/Jupiter sextile on October 11 added some positive energy to help trigger a trend reversal to the upside.
A Trading Top at a Jupiter Station
The market rallied strongly during the first half of 1998, but when Jupiter went retrograde on July 17 the action topped out with the Dow closing at 9337.97. That prompted a slid of more than 17% before the the market hit a bottom on October 8 and began its recovery.
Uranus, Terrorists and a Moving Average
After a pull-back into the Spring Equinox in 2001, the Dow had rebounded robustly into mid-May. On May 30, however, with a Uranus retrograde station in play, the index dropped below its 25-day moving average, triggering an extended price decline that brought the Dow down more than 16% by early September.
Then, with the September 11 destruction of the World Trade Center, the markets plunged even further, bringing the net loss to almost 29% since the high in May. It took some time for confidence to resume, but by October 10 the Dow was trading above its 25-day moving average once again, paving the way for an advance that was to last through the end of the year.
Another Top at the Spring Equinox
In 2002 the Dow Jones Industrial Average once again hit a high at the Spring Equinox, but trended lower after that. As I noted at the time in the FinancialCyclesWeekly newsletter, “The market rally that had been in play for the past month came to a screeching halt last week, with the Dow Industrials and the S&P 500 virtually unchanged for the week as they barely managed to stay in positive territory and with the NASDAQ dropping by more than 3% for the week.”
The Doiw had dropped by nearly 33% when that year’s October Surprise kicked in to bring an end to the bear market on October 10, as Venus and Saturn made back-to-back retrograde stations.
A Mars/Jupiter Square in October
In 2011 an intense rally during the opening months of the year took the Dow to a new high of 12876.00 on May 2, on the eve of the New Moon. Five months later, the Dow was down more than 19% to hit a low of 10404.49 at the Hades station and Mars/Jupiter square on October 4. By early February, 2012, the Dow was trading well above the high it had set the previous May.
October Surprises – Good and Bad
The bottom line here is that October has often been a pivotal month. The October surprises come from the big market shifts that can occur, but those shifts can be either bullish or bearish.
As astro-traders, we can look for big opportunities in October. As we’ve often seen in studying the markets, big trend changes can sometimes accompany major planetary alignments. When those alignments take place in October, we need to pay very close attention!
It’s been six years now since the bottom fell out of the stock market.
That was a tumultuous time, with the global financial system on the brink of total collapse.
And at the heart of the crisis was American International Group (AIG), the huge insurance company that had put itself on the line with credit default swaps on collateralized debt obligations (CDOs) to insure $441 billion worth of subprime mortgages. As the housing bubble began to deflate in 2007 and 2008, AIG had to pay out on more and more claims, until the big banks that had created the fraudulent CDOs backed with Liars’ Loans put themselves in jeopardy, ultimately pushing AIG into a massive liquidity crisis and virtual bankruptcy.
On September 16, 2008, with stock prices in a nosedive and the U.S. financial leadership in full panic mode, Ben Shalom Bernanke, at the head of the Federal Reserve Board, in collusion with U.S. Treasury Secretary Hank Paulson and New York Federal Reserve President Timothy Geithner, pushed through a high-interest federal loan to AIG of $86 billion and demanded the resignation of AIG CEO Robert B. Willumstad, who was replaced by Edward M. Liddy, a board member at Goldman Sachs.
More than five weeks before the collapse of AIG, on August 7, 2008, I had put the spotlight on AIG during an interview with Michael Yorba on his Commodities Classics TV show:
Although I called for “considerable downside” for AIG and the markets in general because of the then-imminent ingress of Pluto into Capricorn, and identified the September 23, 2008 Mercury/Mars conjunction at a Mercury station as a target zone for a trading bottom following a price decline by AIG and the insurance industry as a whole, I was definitely too conservative in my forecast at that time. Instead of finding a bottom at 17.25 as I thought possible, AIG dropped to below $5 a share – but it did find a trading bottom following the September 23 Mercury station.
The details about AIG are especially worth reviewing now, more than six years after that original interview, since AIG and all the big financial players from that time frame are the focus of a major trial set to begin in U.S. Federal Court of Claims on Monday, September 29, 2014. During the AIG trial, many new facts about the mechanics of the government bailout of AIG are likely to come to light. Former Federal Reserve Chairman Ben Shalom Bernanke is expected to testify, as well as former Treasury Secretary Henry Paulson, and Timothy Geithner (president of the New York Fed in 2008, and later Treasury Secretary).
Bernanke’s testimony in the AIG trial is certainly likely to attract lots of media attention. During a 2009 interview with 60 Minutes, he said that the AIG collapse made him so angry at the time that he “slammed down the phone more than a few times.”
During that interview, Bernanke said that “It’s absolutely unfair that taxpayer dollars are going to prop up a company that made these terrible bets, that was operating out of the sight of regulators, but which we have no choice but to stabilize, or else risk enormous impact, not just in the financial system, but on the whole U.S. economy.”
In spite of Bernanke’s claims, however, the argument in the AIG trial is that the Federal Reserve and the U.S. Treasury used the ailing AIG “as a vehicle to covertly funnel billions of dollars” to Goldman Sachs and other financial institutions favored by the government in a nefarious backdoor deal.
The complaint in the case for the AIG trial notes that “This is the only time in history when the government has taken without just compensation and/or illegally exacted the assets and equity of a company and its shareholders in connection with a loan, let alone a fully-secured loan bearing an extortionate interest rate.”
Astro-Trading & Financial Astrology Insights from Tim Bost