If the Dow closes above 12080 on Monday it will be the best performing October on record which dates back to 1896. The only other times the Dow has gained 10% or more in October was in 2002 and further back in 1982.
Naturally if a comparison is made with the 2002 and 1982 events the conclusion will be the market should continue higher for several more years like occurred from 1983 through 1987 (points A to B) and from 2003 through 2007 (points C to D).
However I would caution everyone that the overall setup this time is much different than those prior two events. Back in late 2002 the Dow had gone through a 33 month Bear Market and lost 39% of its value before bottoming in October.
Meanwhile prior to October of 1982 the Dow had been stuck in an extended trading range for nearly 7 years while developing a choppy consolidation pattern.
Finally for those that watch the Put to Call Ratio the 5 Day Moving Average (red line) remained elevated above the 1.0 level in August and September as many were shorting the market which helped lead to a bottom in early October. However we are now seeing a rapid drop but until we see the 5 Day Average drop back to around the 0.82 level the S&P 500 may continue higher. In the past tops have occurred as the 5 Day Average of the Put to Call Ratio has fallen from above the 1.1 level (green line) back to around 0.82 (points E to F).
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