Friday, June 1, 2012

Some thoughts about seasonality and Election Year Trends


Typical seasonal patterns would normally show the market moving higher through the beginning of May, experience a pullback in the second quarter, and a larger pullback in September, October before heading higher again beginning in November. This year reflects that typical performance, as the market has been in “Sell in May and Go Away” mode, with the S&P 500 down nearly 6% this month.
Since many often wonder about the upcoming elections, election years usually differ from traditional seasonality in that they tend to bottom sooner than average years, especially if the incumbent party is reelected. During election years the market typically makes a progress during the summer months, and late June lows likely mark the low for the year.
Market performance during September, November might be a leading indicator of the outcome of the presidential election. 

In years in which the incumbent is reelected, the market usually moves up nearly 4% in those 3 months. 
In years where the incumbent loses the market may experience an average loss of roughly 5% during the months of September, November.

Once again these are just a reflection of thoughts and opinions shared from different sources and are not meant as  recommendation to by or sell any products.

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