Volatility Expected to Increase in October

By Janine Cox | Published 23 September 2019

October is typically referred to as Red October given that many believe it is the worst month in the year for the stock market. Indeed, Goldman Sachs is predicting that volatility will increase in October; so is this a warning sign or something we can largely ignore?

When the market is volatile, there are three things investors can do if you are worried about their stocks: 

  1. Blame the government /Donald Trump,
  2. Behave like an ostrich and bury your head in the sand,
  3. Become a good risk manager.

So how do you become a good risk manager? In this week’s US Stock Market Report, we discuss three things you can do to ensure you avoid getting caught by increased market volatility so you manage your risk and profit more.

We also take a look at how the drone strikes on the Saudi oil facilities has impacted the US stock market, as well as the potential interest rate cuts by the Fed.  

We then take look at what is happening on the Dow Jones Index and the S&P 500.

Last week, the dropped below 27,000 points although it is still up by around 16.8 per cent for the calendar year. That said, the market is only up by around 1 percent in the last twelve months and 2.8 per cent in the past month.  

While we are expecting a further fall this week, I would like to see the Dow Jones Index fall by around 2 to 3 percent before turning to rise in October. This is nothing to be feared as we need to see the market fall in preparation for the next rise.

If the Dow Jones Index does fall by only 2 percent and then turns to rise above 27,000 points shortly after, the market is more than likely to be very bullish into the end of the year. 

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