Thanks to Adam's discussion on Oct's volatility -Weekday At Bernie's, I get to see some historical data from Bernie Schaeffer which also confirmed my own findings. Bernie looked back at the last 10 years and excluding the 1987 Oct crash, Oct actually emerged as the 3rd best month in terms of returns and it has a record of turning in a positive month 68.4% of the time.
I'm not sure which index Bernie has used for his study as benchmark, but above is a 10 year monthly chart of S&P 500. I've highlighted the months of Oct and from there, you see only 2 red monthly bars out of 9 times. While I'm not saying that this Oct will also be a positive month and you go load up on Call options (there's no such thing as 100% guarantee in trading), statistics show that it has more than 2/3 chance of being so.
Candlestick patterns in the major indices are now indicating a reversal, so we may see more pullbacks ahead. Friday is a day to watch for the important unemployment reading as it may affect Fed's decision to cut rates further or stay put.