Bearish Month Ahead

Jerry Welch, Commodity Insite!
Call me at 406 -682 -5010
Ennis, Montana 59729

History shows October to be one of the most bearish months of the year. In particular for the stock market where the largest point and percentage declines have been seen. But there is an irony about October being so hard and bearish on those bullish. The irony of October can be found below.


And below are a few thoughts and ideas from Haunted By Markets in a chapter entitled, Bearish Month Has Arrived that I penned on October 1, 1997. Hopefully you will find something of interest in my ramblings.

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Oct. l, 1997:


Bearish Month Has Arrived

"October, one of the most bearish months of the year for the entire Big Four, stocks, bonds, currencies, and commodities, has arrived. The question is, "how bearish can this October be? That is assuming of course, that October does indeed turn out to be ugly for a wide variety of markets.

For the Dow, the month of October can be a nightmare. The best example of how ugly a break can take place for the equity markets in October was in 1987 when the Dow fell 200 points one day and 500 points the next. And that was back when the Dow was under the 3000 level.


For the U.S. equity markets, October is by far the most bearish month of the year, but there is a "flipside" to a bearish October that should be kept in mind. An especially bearish October simply offers bold traders and producers some excellent long term buying opportunities.


What happens is this. Panic selling pushes a market below what is commonly known as, true economic value." When that takes place, bold traders and investors can scoop up some pretty good bargains. For example, on the very day in October of 1987 when the Dow fell 500 points in one ugly day of hectic trading, soybean prices fell 20 cents a bushel to their lowest levels in weeks. But that turned out to be a major low for soybean prices. And by the spring of 1988, thanks to Mother Nature, soybean prices were in excess of $10 a bushel.


The point is this. Yes, October is one of the most bearish months of the year for the entire Big Four. And yes, I fully expect additional weakness for a number of markets now that October has rolled around once again. More than likely, this October will present bold traders and investors with some bargain basement prices. Before October comes and goes, I am guessing that several commodities will be under, "true economic value." Those commodities should be probed from the long side.

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There is far more to the chapter above, "Bearish Month Has Arrived" than what what I posted. To read the entire chapter consider going to www.commodityinsite.com and check out Haunted By Markets. And keep in mind that with a purchase of my book you receive at no cost 1 full month subscription to Commodity Insite, my twice a day newsletter.


This morning as I type furiously away, the dollar that flashed a modest and I do mean modest downside key reversal yesterday is showing some follow thru weakness today. Should the dollar move lower yet, commodities per se should start heading north. And at this time, the two commodities I favor on the long side of the ledger is gold and wheat.


The time is now 8:45 a.m. Chicago



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