Earlier this week we looked at the best starts to the month of October for the S&P 500. This morning we ran a similar analysis for the DJIA going back to 1900. With a gain of 5.6% eight trading days into the month, this October ranks as the fifth best start to the month in the history of the DJIA, and only the sixth time the index has been up more than 5% eight trading days into the month. Looking at all months, the last time the DJIA was up more than 5% eight trading days into the month was in September 2010 (5.3%).
So what does a strong start to October portend for the rest of the year? In the table below, we calculated the performance of the DJIA over the rest of the month and year in prior Octobers where the index was up more than 5% at this point in the month. For the rest of the month, the index has averaged a decline of 0.3% (median return = 0.9%) with positive returns three out of five times. For the rest of the year, the DJIA has averaged a decline of 5.1% (median = -2.8%) with positive returns only two out of five times. While bulls are enjoying the gains that we have seen to start the month, history suggests that a strong start to October (and the fourth quarter) does not always translate into a strong year-end rally.
Subscribe to Bespoke Premium to receive more in-depth research from Bespoke.