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Kandel on market moves
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October 20, 2000: 6:11 a.m. ET
Could there be a silver lining behind the markets' October oscillations?
By CNNfn Financial Editor Myron Kandel
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NEW YORK (CNNfn) - The stock market looks a lot better now than it did during Wednesday's early-morning free-fall, when the Dow Industrials plunged 435 points and the Nasdaq Composite tumbled 187, in a burst of short-lived selling. Those averages regained a good part of those losses by the closing bell and then staged a muscular rally on Thursday.
What some investors failed to realize during that brief panic is that October -- as dangerous a month as it may be (witness yesterday's 13th anniversary of the 1987 crash) -- is also a turnaround month. And Wednesday's sharp bounce from that morning's lows may very well have been the start of this year's turnaround.
 Take the Dow. From its recent high of 11,310 on Sept. 6, to Wednesday's intraday low of 9,654, the Dow fell 1,656 points, or 14.6 percent, all that in just six weeks. From that low to Thursday's close, it bounced 5 percent.
Now let's go back ten years to the market's 1990 decline resulting from Iraq's invasion of Kuwait and fears that a cut-off of oil supplies might produce a global recession. From the beginning of August to Oct. 10, the Dow fell 411 points, to 2,398. That's a drop -- get this -- of 14.6 percent! Some people think the bull market started then (which I don't agree with because I trace the start of the current bull market to August, 1982, but that's grist for another column). The point is that the August-October decline lasted just ten weeks and bottomed out in guess what month. By the way, the Dow needed four months to get back to its old high, although it did test its low halfway through that period.
Another October turnaround took place after the big one-day crash on Oct. 19, 1987, when the Dow plummeted 508 points, or more than 22 percent. Even though that plunge shell-shocked investors, it was the low point of a nearly 36 percent decline that began that August and lasted eight weeks. This time, it took 22 months to get back to the old high.
The big question now, of course, is whether this is indeed a turnaround or is there more carnage ahead. My guess is that even though there could be some more rocky days ahead, the worst is over, and a rally is underway. I've been saying on CNN and CNNfn that the Dow could hit 12,000 by the end of this year. I felt a lot more confident about that prediction on Sept. 6, with the Dow at 11,310. At that point, I needed just a 6 percent gain. Now I need 18 percent. It will be tough, but it's possible, barring an unforeseen development that shocks the market.
A veteran Wall Street sage once told me that if I wanted to make a market forecast, I should never cite a number and a date at the same time. Clearly, my prediction of 12,000 on the Dow by the end of the year ignored his advice, but I rashly did it. In fact, earlier this year I thought the Dow could hit that mark by Election Day, but that's not in the cards anymore.
Getting back to my theory of an October turnaround, I quote Yale Hirsch, editor and publisher of the "Stock Trader's Almanac," which is filled with valuable stock market advice, historical trends and Wall Street lore. He says October is a "bear killer" and has turned the tide in nine bear markets dating back to 1946. I don't agree that all those were authentic bear markets, but they certainly were substantial downtrends that ended in October. I think Hirsch will now be able to add October 2000 to his list. 
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