Memo to all stock market bears: It’s late in the game and your losing. The calendar says “November,” which means bears only have another 60 days for their wild dreams of a fantastic stock market crash in 2014 to come true. That’s not much time.
The fact is October has historically always been a great month for stock market bears. Some of the greatest stock market meltdowns of all-time have occurred in red October. (See 1929, 1987 and 2008)
But the U.S. stock market’s not so terrific selloff this October was short (pun intended) and sweet.
From mid-September to mid-October, the S&P 500 slid around 6% while stock market fear or volatility (VIX) soared 89%. During bull markets, the average correction in the S&P 500 is a 14.2% decline and has lasted 135 days. By that measure, the October pullback wasn’t even a blip.
Even so, bears that were able to correctly trade the September to October selloff, did pretty good. During this period, the ProShares S&P 500 Short ETF (SH) gained 6.1% while the triple leveraged Direxion Daily S&P 500 Bear 3x Shares (SPXS) shot higher by 18.7%. But again, it was short lived.
“There is an appointed time for everything,” say the wise words from Ecclesiastes. And from an investment angle, stock market bears – as far as 2014 is concerned – have run exhausted their time. Even history teaches us this much because we are now entering into a seasonably favorable period for the stock market.