Month in Review - October 2022
October bucked the seasonal trend of being a poor month, as equities rebounded strongly since the market bottomed on October 13th when US CPI (inflation) surprised to the upside. Too many market participants had hedged equity holdings going into that CPI report, betting against stocks. When they took off the hedges after the report, stock indices exploded higher on the day, with the S&P 500 rallying 5.5%.
This is what happens when a large majority of market participants are positioned one way, and all try to exit through the trap door at the same time. The month ended with the S&P 500 (in CAD) rallying 4.2%, while the TSX Composite increased 5.1%.