By John Reizner |
In my chilling October 12, 2014 post on this site, "Is a Long Term Top in Place in the Stock Market," I related that the market had plunged on October 10 through its 200 day and 40 week moving averages on a daily and weekly basis respectively, Closing for the week below the 40 week moving average was a potential intermediate sell signal for the market. The S&P 500 plunged as low as 1820.66 on October 15th intraday.
The cascading stock market generated apparitions of Halloween goblins and witches on Wall Street and The New York Stock Exchange was thoroughly spooked by the uneasy market. The ghostly beings tried during the month of Halloween to put their hex on the long bull market that began in March 2009, but they did not succeed in terminating the resilient bull market that we investors have experienced for the past six years.
The undead's efforts to stymie the market gained great traction during the month of October as the S&P 500 Index closed below the very important 10 month moving average on an intra-day basis during the month, before reversing and moving quickly upward to retrace its steps. Closing below this fearsome 10 month moving average on an end of month basis has been seen in the past to cause bull markets to shudder and end fitfully. Such an event occured before both the dot-com stock market meltdown at the turn of the century and also before the financial crisis from which we may be only emerging economically today.
Investors celebrated mightily on Halloween day as the S&P 500 rose 23.40 points and closed at 2018.05. The Dow Jones Industrial Average rose 195 points for the day to close at 17,390 on October 31st. Happily, both averages closed above the ten month simple moving average for the monthly bar of October and a potential long term sell signal was averted. Investors were cheered as they rode to their homes to trick or treat without fear of scary skeletons in the dark or having their candy stolen.
Stock market cheerleaders are again singing "Happy Days are Here Again" and investors (including this investor) may now all rest calmly knowing that we are all good at least until the next Fed meeting. Thank heaven I got back in near the bottom!