We received the question: “What should I do if markets go down in October?” October has a reputation as a dangerous month, and this year the US midterm elections, Q3 earnings season and rising rates add to the uncertainty. In this research we look at what is happening beneath the index surface, what bank strategists suggest and how to prepare in advance. Nobody knows exactly where markets will go – so the goal is to play a more rational game.

📌 Key Insights

1. 🗞️ October’s reputation: history vs. reality

Famous crashes: the 1929 crash, 1987’s “Black Monday” (Dow Jones –22.6% in a day) and the peak of the 2008 crisis all happened in October.
The statistics are milder: on average, September is the weakest month for the S&P 500. October stands out more for volatility, and several bear markets ended in it (2002, 2022).

2. 🔍 Bad breadth: the index hides more than it shows

Only 23% of S&P 500 stocks were above their 50-day moving average on October 2.
54% of the Russell 3000 has fallen 20% or more since June – 96% of semiconductors and 77% of software names.
The Russell 2000 trailed the S&P 500 by about 9 points in the quarter, close to its worst quarters in 40 years. The momentum factor had one of its deepest drawdowns on record.
Goldman Sachs: the median tech stock is about 16% below its high, with breadth at dot-com era lows.

Takeaway: a narrow group of large caps is holding the index up, while for much of the market the “October decline” has partly already happened.

3. 🏦 What bank strategists suggest

Morgan Stanley (Mike Wilson) favours large-cap quality, especially asset-light names with improving earnings revisions, and adding riskier stocks only if the index falls in October – which would complete a multi-month correction cycle.
His Fresh Money Buy List: ABBV, DAL, EQT, KNX, TGT, WMT. This is an example of a bank’s view, not our recommendation.

4. 📋 How to prepare in advance

Horizon and reserve: when will you need the money, and is there a cash cushion so you never have to sell at the bottom?
Diversification: is the portfolio dependent on one sector or a few tech giants?
Rules, not emotions: panic selling turns temporary losses into real ones, and the best rebound days often sit next to the worst. One bad decision can wipe out several good ones.

📊 Summary

October is famous for crashes, but it is more a month of volatility than of guaranteed losses. This year the index sits near records, yet beneath the surface more than half of stocks are already in a correction. Professionals treat a decline as a pre-planned situation – and every investor can do the same.

A big thank you for reading! Before making any financial decision, gather as much information as you can and consider your own situation.

Sources

Morgan Stanley (Mike Wilson) strategy note, via ZeroHedge (2026-10)
Goldman Sachs tech desk, via ZeroHedge (2026-09-28); ZeroHedge (2026-09-25)
Equity Clock – Stock Market Outlook (2026-09-29, 2026-10-06); J.P. Morgan / Chase (2026-07)

⚖️ Disclaimer

This market research is for informational purposes only and does not constitute investment advice or a solicitation to buy, sell or hold any financial instrument. Past performance does not guarantee future results. Before making any investment decision, please consult your financial representative.