October is notorious for fooling investors with its wild fluctuations. But this is also often the time when the market bottoms out before surging higher at what could be the best time of year for stocks. Over the next week, the market could show more evidence of a bottom forming, as investors browse through a series of earnings reports from a diverse group of S&P 500 companies. Goldman Sachs, Procter & Gamble, Bank of America, Tesla, Netflix, United Airlines and Johnson and Johnson were among the nearly fifty names the S&P 500 reported. As for the market, it stuck to the October development books for wild moves over the past week. In a particularly volatile session, stocks fell to new lows on Thursday following a hot consumer inflation report and then rallied sharply in the spring. That action has encouraged some strategists to believe that the market has formed or is about to form at least a near-term bottom, even as shares trade on Friday lower. “We think there is a very good chance that you are bottoming, setting the stage for a bear market rally in the year – October – when,” said Julian Emanuel, head of equity. you often see these kinds of events.” , derivatives and quantitative research at Evercore ISI. “We’re entering a period where historically, midterm and into next year, there’s been a very positive trend for equities.” Emanuel said the market could also be boosted by the fact that sentiment is so negative and “justifiably so.” “You’re on the low side and the Fed keeps going up,” he said. But he sees a 17% to 20% chance of a rally in the S&P 500. “When we think about the August highs, the September drop and the long tradition of October bottoms lead to rallies. Fourth-quarter sentiment, sentiment and positioning context, we think the odds are good for this rally coming to fruition,” said Emanuel. Historically, during midterm election years, the market bottomed out on October 9, paving the way for fourth-quarter gains, according to Oppenheimer. According to Stock Trader’s Almanac, “The fact that October has passed the usual risks and high volatility is encouraging.” Almanac’s website notes seasonal patterns and four-year cycle patterns are following historical trends. This should culminate in a bear market near the end of October. Stock Trader’s Almanac indicates that more bear markets have ended in October than any other month. Also, in the six months starting in November, stocks have rallied higher in all of the 18 medium-term years since 1950. But Emanuel said it’s unclear how long the rally will last. “There are so many political and geopolitical events at the end of the year, it is difficult to say how long it will last,” he said. Technically For some chart-watching analysts, Thursday’s big “outside day” in the stock market turned bullish and set the stock market up for a seasonal spike higher. After the S&P 500 hit a low of 3,491.58 on Thursday, she now sees initial resistance at 3,914, said Katie Stockton, founder of Fairlead Strategies. The S&P 500 index was down about 0.9% for the week through Friday afternoon and hovered just above the 3,600 level. “It is a level that has acted as both support and resistance in the past,” she said. “For us, that’s a reasonable goal. I wouldn’t be surprised to see it wiped out, but it was the first protest.” Stockton said some of her indicators show positive momentum for the market, and it’s a positive seasonal time of year. While she expects a major rally, she has no indication as to whether it will last until the end of the year. “The effects are short-term, but they have more medium-term potential, meaning weeks, not days, and we have some positive seasonal factors at play,” she said. Risks are still there. Emanuel said that higher interest rates could continue to be an issue for equities and a risk for the rally. The US 10-year yield was at 4.02% on Friday, near the top of the recent range. While investors appear less worried about the UK, National Alliance’s Andy Brenner said the markets are not out of the woods. Yields on UK government debt surged after the UK government announced plans to cut taxes and increase spending. The Bank of England stepped in to buy bonds, temporarily calming markets and helping UK pension funds hurt by a spike in yields. Yields move inversely to price. “Today is the last day the Bank of England intervenes, and now the Bank of England in two weeks will start selling bonds,” Brenner said. “I think those who are wary of bonds will be drooling over the next two weeks.” He said Britain’s 30-year gilding saw nearly 60 basis points higher in Friday’s output, even as the UK government reversed its tax plan and appointed a finance minister. new. Earning Season Another risk to the market is earnings. Q3 earnings started this past week with better-than-expected reports from big banks JP Morgan, Wells Fargo and Citigroup. Comments from the management of companies reporting next week will be watched for insight into supply chain issues, cost inflation and pricing power. “Analysts are trying to get more color so they can know what to do with forward estimates,” said Liz Ann Sonders, chief market strategist at Charles Schwab. “Also, the impact of currency – a rough estimate is that every 1% move in the dollar values earnings by half a percent… Even in the second quarter, you’ve got companies. Major multinationals started talking about the impact of a strong dollar.” 500’s earnings are expected to grow 3.6% in the third quarter, based on actual reports and estimates, according to Refinitiv. Without a boost from more than doubling profits from energy companies, S&P profits would have fallen 3.1%. Sonders said the market needs to see more stability in futures earnings before it can weather the current period of swings. She said investors must also appreciate the fact that the Federal Reserve has no plans to pivot to cutting rates, once it completes its rate-raising cycle next year. “A lot of sentiment and technical indicators and even breadths are starting to line up in a way that makes the outlook relatively good if the horizon,” said Liz Ann Sonders, chief market strategist at Charles Schwab. yours is another year.” Last week calendar Monday Earnings: Bank of America, Bank of NY Mellon, Charles Schwab 8:30 a.m. Empire State Production Tuesday Earnings: Netflix, Johnson and Johnson, Goldman Sachs, United Airlines, JB Hunt Transport, Interactive Brokers , Truist Financial, Albertsons , State Street, Hasbro, SunTrust, FNB, Surgical Visual 8:30 a.m. Business leaders survey 9:15 a.m. Industrial production 10:00 a.m. NAHB survey 4:00 p.m. TIC data 5:30 p.m. Minneapolis Fed President Neel Kashkari Wednesday Earnings: Procter & Gamble, Tesla, IBM, Travelers, Knight-Swift Transportation, Lam Research, Alcoa, PPG Industries, Nasdaq, Abbott Laboratories, Citizens Financial , Baker Hughes, Elevance Health, Winnebago, Northern Trust, Steel Dynamics, Equifax, WD-40, Comerica, Prologis, Ally Financial 8:30 a.m. Housing starts 1:00 p.m. Kashkari Fed in Minneapolis 2:00 p.m. Books beige 6:30 p.m. Chicago Fed President Charles Evans 6:30 p.m. St. Louis Fed President James Bullard Thursday Earnings: AT&T, Dow, American Airlines, CSX, Whirlpool, Snap, Blackstone, Union Pacific, Nokia, LM Ericsson, Danaher, ManpowerGroup, Boston Bear, Tenet Healthcare, Freeport-McMoRan , Fifth Third, KeyCorp, Quest Diagnostics, Marsh and McLennan, Philip Morris, Genuine Parts, Tractor Supply, Pool Corp 8:30 a.m. Initial announcements 8:30 a.m. Philadelphia Fed manufacturing 10:00 a.m. Existing Home Sales Friday Earnings: American Express, Verizon, Regions Financial, Schlumberger, Interpublic, Huntington Bancshares, HCA Healthcare