October Rally in the Works? S&P 500 Historical Averages Say Yes

October Rally in the Works? S&P 500 Historical Averages Say Yes


Could there be an S&P 500 October rally in the works? According to S&P 500 historical averages – yes. Here are the weekly average win-rates for the S&P 500. Notice – following a typical September drawdown, October often begins a series of “win weeks” – AKA, weeks that experience a positive return.

S&P 500 historical averages

Source: TrendSpider

Over the past 15 years, the first four weeks of October experienced positive closes between 71%-79% of the time. This isn’t the only reason we may be in for an October S&P 500 rally.

Fundstrat analyst Tom Lee sees market strength carrying through the end of the year in a big way.

S&P 500 historical averages

Source: CNBC

Tom Lee gets a lot of flack for the misconception that he’s “always bullish” – but he’s had an incredible year and you can’t take that away from him. For instance, when nearly every institution was calling for an earnings apocalypse, a recession, and lower lows this year, Tom Lee was bullish. That was accurate. He’s made short-term predictions that have turned out accurate. And he even expressed caution in August and September:

S&P 500 historical averages

Sometimes you have to give credit where credit is due – Tom Lee has been right through 2023, and that gives some credence to his prediction that Q4 could see a massive stock market rally.

Additionally, after briefly breaking below a one year upwards trend line, the SPY successfully retested and bounced from the 200 day moving average – an area we’ve called a “line in the sand” for bulls, leading to a weekly close above the trend line.

With a reignited war breaking out in Israel, and a CPI this week, it’s a do or die week where bulls will have several key tests of their resolve. But according to S&P 500 historical averages and one of the most accurate analysts on Wall Street in 2023, these are tests they’re going to pass.

Now the question is – what tool will you use to trade the potential rally?

If you’re using long shares of stock, you’re putting yourself at a massive disadvantage. While options have garnered a reputation for being high risk gambling tools, with the right strategy, you can use options to do anything shares can do and much, much more. For instance — want to simulate shares at a lower risk? Try utilizing a stock replacement strategy using deep-ITM long-dated call options. Predicting a shallow directional move on a short time frame? You could consider using a short-dated vertical spread capped at the top of your expected move. Looking to build a shield for your investing portfolio? There are a variety of ways you can use options like an insurance policy to protect your portfolio from the most treacherous of stock market storms.

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