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Don’t Let Halloween Spook You!

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With cleanup underway from massive Hurricane Sandy and the subsequent two-day shutdown of the NYSE, it's understandable why investors are on edge on this Halloween, the final trading day of October. This month has seen selling pressure from earnings reports signaling the first negative quarter since 2009 and continuing economic data showing little improvement. For the month, the DJIA is down 2%, the S&P 500 down 2.5%, and the Nasdaq off 4%. (See Related: The Real October Surprise May Be Hiding in Plain Sight)

It was quite a different environment last Halloween, when we were truly spooked by Europe, reacting to every headline about the solvency of Greece. The market fell 2.5% on the final day of October, however it capped off a very strong monthly gain of 13% — a rise that confused nearly all market participants.

So on average, should investors be spooked by Halloween?

Historically, no, according to Ryan Detrick, senior technical analyst at Schaeffer's Investment Research. Detrick crunched the numbers and found that Halloween tends to outperform your average trading day. His chart below shows that Halloween as a trading day, 15 of which have occurred since 1990, tends to rise 0.27% versus a 0.03% average for all other days.

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Source: Schaeffer's Investment Research

Looking at it year-by-year, Halloween has been positive four of the last six years and seven of the last 11, according to Detrick's chart below.

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Source: Schaeffer's Investment Research

Bottom line: Don't let this Halloween spook you. The market is back up and running and our country's finest, dedicated emergency management teams are hard at work keeping America safe.

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