Art Cashin On The "October Syndrome" And Broken Seasonal Patterns
In a market where the Fed has assured that up is always and forever, or at least until such time as Primary Dealers can take down 99.9% of any given bond auction, down, it is no surprise that even monthly and seasonal patterns are completely inverted. The traditionally weak September market performance, has been flipped on its head in an attempt by all those involved to rescue the vast majority of underperforming hedge funds which would otherwise see an influx of redemption notices and terminations (ref: DE Shaw). So now that September is in the books, what does conventional knowledge tell us about October, so that in this Fed-induced bizarro world traders can come in and do the opposite. We look to Art Cashin for the answer.
The October Syndrome: Some Personal Historic Observations:
"The months of May and October have always broken hearts on Wall Street. In fact when I studied under the Moose Head (at Eberlins) it was a frequent subject. Prior to 1929 it was almost logical. We were an agrarian society and huge chunks of money shifted from city banks to country banks (and vice versa) at planting time and harvest time. The resulting temporary dislocations in bank assets caused spasms of tight money and down drafts in the stock market. But after 1929 it kept happening even though we had more smokestacks than haystacks. Additionally, the creation of the Federal Reserve in 1913 should have smoothed out any imbalances in money shifts. Anyway it makes the debate interesting."
This year we have to take seasonal patterns with a grain of salt that you would need a wheelbarrow to carry. The Rosh Hashanah seasonality didn’t work. The Autumnal Equinox seasonality didn’t work. And, we’re on the mark to close out the strongest September since 1939. Sometimes the groundhog strikes out.
In other words, good luck to everyone - your pockets are about to picked by the robots (again) no matter what. Stay nimble.