As we exit the month of October, stocks are set to have had the worst month since February 2009 for the S&P 500 and the worst October since the 2008 financial crisis. The U.S. benchmark is set to drop about 8.5%, outdone by the 16.8% loss the index witnessed in 2008 just weeks after the collapse of Lehman Brothers.
The month was overwhelmed by bad news but lacked a clear catalyst. Concerns varied with a US-China trade war, the Federal Reserve’s interest-rate policy, and a slowdown in global growth led to a wave of heavy selling in the S&P as well as in the Dow and the Nasdaq.
Another factor for the markets is the slowing Chinese economy, which, after a decade or more of blockbuster growth is reaching maturity, bringing with its smaller increases in the gross domestic product. Debt levels in China are also huge, another major concern for many in the markets.
Though stocks have witnessed a horror month, they are bouncing on October’s final day, with the S&P 500 up 1.3% after an hour and a half of trade, and the Nasdaq up 2.18%. The S&P 500 managed to break above the 200-hour Moving Average (Red Line) and seems to have it some sort of resistance at 2,730 before starting to look on the downside.
The RSI is also showing signs of bullish momentum forming as the indicator has bullishly broken above the 60-level, which is a clear sign that the index has entered into positive territory, but the problem now is whether or not the positive momentum can be sustained.
Currently, the best performers on the S&P 500 are Chesapeake Energy (+8.66% at $3.55); Varian (+8.04% at $121.23); and Molson Coors Brewing (+7.71% at $62.70). The worst performers are Baxter (-8.71% at $62.68); Kellogg (-8.15% at $66.00); and Gilead (-5.06% at $68.39).