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For October, we’ve already seen a new lifetime high of 14,115.51 on the Dow Jones Industrial Average, a new 52-week high of 2,747.11 on the Nasdaq and a near lifetime high on the S&P 500.
So what does the rest of October hold for us?
According to The Stock Trader’s Almanac, October is known as the “bear killer” month since there have been 11 post-WWII turnarounds, the most recent taking place in 2002, which was the end of the major tech crash. On October 10, 2002, the Nasdaq hit a low of 1,108.49 and hasn’t looked back since.
Of course, times are different now: We are in the middle of a rally that could very well take us to even greater highs.
Last month, when we spoke about what to expect from the September markets, I noted that the same formation we saw on the Dow this time last year added 15% of value to the large caps. That could still mean a value of at least 15,525 by March 2008.
All good news for those of us holding stocks into the New Year.
There’s another good omen of course: The worst six months of the year end with the month of October. That jives the old adage, “Sell in May and go away,” which seemed to be the consensus for many traders and investors this year. In the beginning of May, the Dow was at 13,062 and only got as high as 14,021.95 before dropping to its most recent low at 12,517.94.
This simple advice from The Stock Trader’s Almanac sums it up: “October is a great time to buy.” It’s actually been the best month in the last eight years on the market.
But the good news just keeps getting better. The end of October is the best time to buy tech and small-cap stocks at lower prices.
This seems about right if you take a quick look at the Nasdaq-100 (QQQQ) ETF. The QQQQ has taken a slight dip over the past four years going into November, offering great low prices for quick pops on tech stocks.
And the Russell-2000 (RUT) which tracks the top 2000 small-cap stocks on the market, is usually ending a short-term correction or starting a new cyclical rally at the tail end of recent Octobers.
If you’re an investing getting back into the market after the summer season, it makes sense to invest in an exchange that will profit from both increase buying on tech and small-cap stocks: the Nasdaq Stock Market Inc. (NDAQ:NASDAQ), which we’re currently tracking here in our model portfolio.
Since I recommended investing in NDAQ on July 26, it’s up 24.94% already. Consistently over the past few years, the NDAQ has moved in quick rises near the tail end of the year.
On a daily basis, the NDAQ has been on a solid roll. A few days ago Nasdaq announced it would acquire the Boston Stock Exchange (BSE) for $61 million. NDAQ also been approved to open a representative office in Beijing, China, a market that’s seeing extreme growth.
NDAQ, along with Borse Dubai, recently bought 47.6% of the OMX exchange. And the Nasdaq announced the sale of its remaining 5.3 million shares in the London Stock Exchange Group (LSE) after its failed attempt to acquire the LSE earlier this year.
Overall, the NDAQ looks to be one of the best-performing stocks going into the fourth quarter of the year.
Many of the other stocks we’ve been following here in our American Capitalist model portfolio are doing well also:
Nasdaq Stock Market Inc. (NDAQ:NASDAQ): Up 24.94% since July 27.
AT&T Inc. (T:NYSE): Up 7.18% since August 1.
OfficeMax Inc. (OMX:NYSE): Down 3.04% since August 15.
Apple Inc. (AAPL:NASDAQ): Up 17.78% since August 30.
Nortel Networks Holdings (NT:NYSE): Down 2.14% since August 31.
Family Dollar Stores (FDO:NYSE): Down 1.40% since September 24.
Big Lots Inc. (BIG:NYSE): Down 3.25% since September 24.
Cumulatively, that’s a gain of 40.07% so far for American Capitalist!
Have a good weekend, and we’ll talk next week.
Ann
Buy Signal: October Ends the Worst Six Months of the Market Year
10/5/2007
Tech Stocks: The Nuts and Bolts of the New Tech Boom
10/4/2007
Investment Strategies: The Tao of Advice
10/2/2007