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COMMODITY INSIGHT
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(October 26, 1997) STOCK INDICES: World equity prices were hit hard this week following a decline by the Hong Kong market. A rise in interest rates in Hong Kong sent Asian markets into a tailspin and it quickly spilled over to the U.S. and European markets as well. This was not a good week for the bulls in any stock market anywhere in the world.
But that should not come as much of a surprise. After all it is October, the most bearish month of the year for equities. This October is simply reminding everyone that it has been earmarked by fate to be especially ugly and cruel to those that scoff at the idea that any particular month can be hard on the bulls.
With the collapse in world equity prices running through and including Friday, it is hard to say what is in store for investors and traders for the upcoming week. But of this I am certain. When October rolls around again next year, there will be many more voices heard about just how bearish an October can be.
Here's how the S&P 500 futures contract performed Friday, when the Dow was off 132 points. The S&P dropped $7,500 a contract in the first few hours of trading and then stabilized. With 2 hours left, it managed to rally $8,500 off its early day low. But then it promptly fell $7,500. In other words the daily swing on Friday was about $23,500 per contract. How's that for some action?
Jerry F. Welch
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