The Hunt for Red October Turns Green

The hunt for red October is over, and it ended with a whimper as some of the largest mutual funds in the world marked their year-end. What is historically one of the scariest months of the year simply morphed into one of the best Octobers ever.

If Thursday had held its own, it would have been the best October ever. As it stands, the Dow's 10.6% gain is the best since January 1987. Interestingly, this was bettered only by the gain in October 1982. Is the important 20-year cycle at work?

Can Harvey Pull a Rabbit Out of His Hat?

Despite weak economic news, the SEC chairman getting pitted once again, and a shellacking in the health care sector, the market basically held together. However, once again 896 (resistance down from the Aug. 22 high) proved to be insurmountable, given Thursday's hat trick of events.

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The Full Monte?

Early Thursday, the market shrugged off worse-than-expected GDP and initial jobless claims, as it has been shrugging off negative news throughout October. This is a change in personality. However, now we are at a juncture. Is the market going to roll over or has it digested in good fashion the surge from October, and is it mustering the strength to attack the neckline at 965?

Is this a midpoint for another leg up? Although many of the cycle boys have a turning point for early next week, it is important to remember that turning points don't have to be highs or lows -- they can be acceleration points.

Remember yesterday's chart of the Nasdaq Composite? On Monday, the Nasdaq came within a whisker of turning its monthly chart up, but failed to do so by about a point before tailing off. Thursday, in fact, the Nasdaq did turn its monthy chart up, with trade just marginally over the high of Sept. 11 of 1347.27. Thursday's high is 1347.58. Again, the Nasdaq tailed off, and the action from here must be watched carefully.

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Jeff Cooper is the creator of the Hit and Run Methodology and the author of the best-selling books Hit and Run Trading (The Short-Term Stock Traders' Bible), Hit and Run II (Capturing Explosive Short-Term Moves in Stocks), as well as a video course, Jeff Cooper on Dominating the Day Trading Market. He also created the Hit and Run Nightly Reports and co-founded a trading markets Internet site. Click here for information about Cooper's email newsletter, The Trading Reports. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Cooper cannot provide investment advice or recommendations, he welcomes your feedback.

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