CNBC Story: This is the Worst Week for Stocks Historically Speaking

September 27, 2016 by Matt McCracken

According to a CNBC report, LPL Financial analyst Ryan Detrick has spent a remarkable amount of time and effort to figure out that the 38th week of the calendar year is the worst for stocks - historically speaking that is.  Of course, the uber-bullish folks at CNBC promptly figured out a way to discredit Mr. Detrick.  BTW, this week happens to be the 38th week of the year. 

I have done my own studies on various dates of the calendar to find some utterly incredible coincidences.  So allow me to take Mr. Detricks findings one step further. 

Did you know the three worst days in the market in the 20th century all overlapped the exact same day of the year?  On the exact same day of the calendar, the stock market experienced three separate declines in excess of 10%!!!  Total losses for these three days were just a hair short of 47%.  These three days took place in October in 1929, 1931 and in 1987. 

And did you know, the worst point decline of the 2000 – 2002 Dot.bomb and the 2008 Financial Crisis took place on the exact same day? (Of course, these took place around week 38 of the Gregorian calendar as the LPL Analyst would point out.)  

I personally remember the worst day in market history taking place in 1987.  We were driving home from school in our “new-to-us” convertible ’66 Mustang, my brother and I could not get our jerry-rigged mobile CD player to work (yes, it was affixed to the vehicle using a jock strap as that was the only means we could figure out to keep it from skipping).  So we were forced to listen to the radio and shortly after “Money for Nothing” came to an end, the DJ on 92.5 KZPS came on talking about the carnage in the stock market.  Which prompted the DJ to play "Money for Nothing" again.  And again.  And again.  

And this day in October of 1987 was the exact same day as the largest daily declines leading into the Great Depression.  In 1929, on the same day, the stock market fell 13.5%!  Then in 1931, it fell 10.7%!! 

These “black swan” events did not actually take place on the exact same day on the Gregorian calendar – the one we use here in the good old US of A.  If they had, you would have heard about it by now and the FED would just close the market that day.  But they did take place on the exact same day on the Jewish Calendar.  The day is Tishri 25 (The ’87 Crash actually took place on Tishri 26 as Tishri 25 was on a Sunday and the market was not open but essentially overlapped the same day.) 

The worst day in 2001 and 2008 also took place on the exact same day of the Jewish Calendar, not the Gregorian one.  The day these two events took place is Elul 29 – Jewish New Year’s Eve (which takes place at the end of its sixth month  - terribly odd in my opinion).  And the day after Elul 29 is the Rosh Hashanah.  And 12 days later comes Yom Kippur.  These are the holiest days of the Jewish Calendar.  And they are the days the Torah calls for remission of debts and freedom from slavery. 

It just so happens that the window for the Jewish New Year typically falls in the 37 – 38 week time frame of the Gregorian calendar.  Which coincides with Mr. Detrick’s study.  But this year is an exception as its Jewish Leap Year.  And when the Jews do Leap Year, they don’t just add one day, they add an entire month.  (Because their year is based on a lunar year which is considerably shorter than a solar year, they have to add a month or their festivals would fall outside of the intended seasons). 

So this year, Jewish New Year's Eve and Day take place much later on the Gregorian calendar.  October 2, which is a Sunday, is Elul 29 and Rosh Hashana is October 3rd.  Yom Kippur falls on October 12th.  So we still have a couple of weeks to see if this historic window of catastrophe in the markets will lead to a significant decline.  

For full disclosure, all of these "black swan" declines took place according to a seven year cycle consistent with the Jewish Year of Remission (even more remarkable, right!!!).  And this year is not a part of that seven year cycle.  If a significant decline takes place on top of Rosh Hashana this year there is a very logical explanation but I'm not a soothsayer or fortune teller so I'll wait to see how it plays out before providing an explanation.