Tuesday, September 21, 2010

Stock Market mini-crash about October 20?

I have a theory that the dates October 20 and April 20 (six months later) are very unlucky. I don't mean on the precise date, I mean about that date, plus or minus a couple of weeks. Financial collapses usually happen in October and physical disasters happen in April. Here are some bearish events that took place in September or October:

October 29, 1929 great stock market crash
October 19, 1987 The stock market crashed for no apparent reason, and the Dow was down 22%.
October 13, 1989 ("Friday the 13th mini-crash") - The stock market drops 12% over 2 days, blaming a failed buyout. "Many investors were left stunned".
October 11, 1990 Dow Jones at 2365
September 10, 1998 - Dow hits a short term low of 7,615
September 23, 1998 - LTCM crash. LTCM was providing returns of 40% annually when suddenly their economic theories quit working. The Fed bailed them out, fearing a systemic collapse.
September 11, 2001 - The stock market closed for a week and when it opens, drops 14%.
September 21, 2001 - dow closes at 8,235
October 9, 2002, dow closed at 7,286, a 37.8% decline.
September 15, 2008 - Lehman Bros collapsed, the stock market quickly drops 5%, the Fed takes over AIG, and Congress rushes through a $700 billion bailout.
October 27, 2008 - Dow Jones hits a short-term low of 8,175. (It jumped by 900 points the next day, but dropped even further in Nov. 2008 and March 2009).

Update:
The Panic of 1873 started on September 18, 1873 with the failure of Jay Cook & Company.  This started a chain reaction of bank failures and the NYSE closed for ten days starting Sept. 20, 1873.
The Panic of 1907 started on October 22, 1907 with a bank run on the Knickerbocker Trust Company.

Update 2:
Montgomery recalls living through the October "massacres" of 1978 and 1979, the crash of 1987, the mini-crash of 1989, the 1997 Asian collapse and the Long-Term Capital Markets plunges [in 1998], which started to cascade downward in late September. And while gold bullion topped in January 1980, gold stocks made their highs on Sept. 22 of that year, he adds. That date also saw the peak in many oil stocks.
Looking back farther, on Sept. 22, 1929, the Dow Jones Utility Index became the final major average to make its high before the Great Crash. And in 1873, a panic forced the New York Stock Exchange to shut down, Montgomery further details.
And who can forget 2008, when markets went into free fall in the days following the collapse of Lehman Brothers? What's remembered less well now is the market chaos in the subsequent days after the House of Representatives initially rejected legislation that created the Trouble Asset Relief Program
Currencies have seen historic changes around this date as well, he adds. The British pound was taken off the gold standard and was devalued a huge 28% on September 21, 1931. Exactly 54 years later, the Group of Five produced the Plaza Accord, which brought a sharp decline in the dollar and expansion of global liquidity. Black Wednesday, when Britain was forced to withdraw from the European Exchange Rate Mechanism, came a few days early on Sept. 16, 1992.
I also recollect that Treasury note and bond yields made their historic highs in late September, 1981, with shorter maturities hitting 17% and long bonds reaching 15%. That marked the end of a 35-year bear bond market from the end of World War II.
"If that's not enough, several of the astrological types claim their charts show [this] week is fertile ground for surprises – geo-political and otherwise."
http://www.zerohedge.com/news/2014-09-22/bofaml-repeats-art-cashins-concerns-september-seasonal-slump

Update 3: The Black Friday gold panic of September 24, 1869 was caused when two speculators attempted to corner the gold market. The price of gold briefly went as high as $162.50 per ounce before dropping to $133 after the Treasury sold some gold.

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