September was a rough month for stocks, will October be better?

STA Research
by: STA Research
Stock Forecast

Everyone thinks that October is statistically the worst month of the year, mainly because of the 1987 crash. However, it is actually September, and this year’s stock market performance for the month proved that. September usually starts off on the back foot. Traders get back to their desks, and reality settles in, and they hit the sell button.

September’s performance for the markets saw the S&P 500 SPX, falling by 9.34 percent, while the Dow DJIA dropped 8.84 percent and the heavily laden tech index, the Nasdaq Composite COMP, dropped  10.5 percent. The Nasdaq recorded the worst September since the financial crisis in 2008.

Last week saw all three indexes break support levels and it’s now possible that they all could fall at least 10 percent lower or more. The Dow Jones Industrial average could now test the next support level at 25000.  The SP 500 could now test the next support level at 3269, and the Nasdaq Composite could test the support level at 9800- 10000.

The past week really topped off the month, which saw currency volatility that wreaked havoc on the British pound, sent treasury yields soaring and caused the 30 year US mortgage rate to hit 6.25 percent.

So far in the first 2 days in October, markets have put in a floor after breaking technical support levels and have rallied strongly yesterday(Monday) and especially today(Tuesday) as two of the three market indexes gained over three percent.  We are now sitting at a pivotal point, are we on a new leg higher, or is this 2 day rally a dead cat bounce, and just a rebound for short sellers to release their next attack on?

Some seasoned investors felt convicted that the Federal Reserve will now hesitate with the continued aggressive rate hikes, as they see the markets, housing markets, and now job situation starting to reel in response to their monetary policy to combat the rampant inflationary pressures.

If we look at several long term charts, 5, 10, 15 and 20 year horizons, we will see that from a charting technical standpoint markets are still very very overvalued, a consequence of the pandemic quantitative easing.  Like a rubber band, the market needs to snap back into fair valuation from being pushed to far outside the realms of current fundamentals which need to support them.

Most popular stocks are now supporting “Buy” signals after the recent sell off, and technicals are now stating markets and stocks for the most part are oversold.  Apple, Tesla, Meta, Google, and Snowflake are all now sporting “Buy” signals possibly showing that this next leg up had staying power as investors are will to expose themselves to risk again as valuation models are now very appealing and worth the risk of looking into the headlights of continued interest rate hikes.

Let’s have a look at the aforementioned market leader’s stocks to gage sentiment:

AAPL Stock Forecast & Price:

Based on the Apple stock forecast from 22 analysts, the average analyst target price for Apple is USD 175.41 over the next 12 months. Apple average analyst rating is Strong Buy. Stock Target Advisor’s own stock analysis of Apple is Bullish , which is based on 10 positive signals and 4 negative signals. At the last closing, Apple stock price was USD 142.45Apple stock price has changed by -5.52% over the past week, -8.57% over the past month and -0.14% over the last year.


GOOGL Stock Forecast & Price:

Based on the Alphabet stock forecast from 35 analysts, the average analyst target price for Alphabet Inc Class A is USD 272.46 over the next 12 months. Alphabet Inc Class A’s average analyst rating is Strong Buy. Stock Target Advisor’s own stock analysis of Alphabet Inc Class A is Bullish , which is based on 9 positive signals and 3 negative signals. At the last closing, Alphabet stock price was USD 98.64Alphabet stock price has changed by +0.48% over the past week, -8.54% over the past month and -27.76% over the last year.

META Stock Forecast & Price:

Based on the Meta Platforms stock forecast from 33 analysts, the average analyst target price for Meta Platforms is USD 221.80 over the next 12 months. Meta Platforms average analyst rating is Strong Buy. Stock Target Advisor’s own stock analysis of Meta Platforms is Bullish , which is based on 10 positive signals and 4 negative signals. At the last closing, Meta Platforms stock price was USD 138.61Meta Platforms stock price has changed by +1.64% over the past week, -13.54% over the past month and +872.70% over the last year.


SNOW Stock Forecast & Price:

Based on the Snow stock forecast from 30 analysts, the average analyst target price for Snow is USD 205.85 over the next 12 months. Snow average analyst rating is Strong Buy. Stock Target Advisor’s own stock analysis of Snow is Slightly Bearish, which is based on 3 positive signals and 7 negative signals. At the last closing, Snow stock price was USD 172.51Snow stock price has changed by +4.48% over the past week, +0.59% over the past month and -43.20% over the last year.


TSLA Stock Forecast & Price:

Based on the Tesla stock forecast from 32 analysts, the average analyst target price for Tesla Inc is USD 715.87 over the next 12 months. Tesla average analyst rating is Buy . Stock Target Advisor’s own stock analysis of Tesla is Slightly Bullish , which is based on 10 positive signals and 6 negative signals. At the last closing, Tesla stock price was USD 242.40Tesla stock price has changed by -12.18% over the past week, -10.29% over the past month and -6.19% over the last year.


We can see from the recent sell-off,  that stocks are becoming very undervalued in comparison with current stock prices to analyst average targets.  It would appear that we are definitely in a new leg higher which commenced on Monday October 3rd, however the question concerning investors is how high will the indexes go?  If we have a look at the charts of the three major  indexes for a short term view, we will see that indexes might only have 5-10 percent upside, maximum, before they hit resistance levels and continue on their long term downtrend reflected in a 10-15 year chart as previously discussed. In short, October could see the first half of the month experience a rally, and then the second half will see more downside, and could finish the month overall lower as a consequence as short sellers ride the bear down!


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