Almanac On Mid-Term Election Seasonal Stock Market Patterns

[StockBuz]

I love this stuff and you can't find any better out there than Jeff Hirsch @ Stocktradersalmanac  Of course this is by no means a guarantee of what is to come, but it definitely seems as though economic conditions AND a long-in-the-tooth bull run may bode well for a further pullback (imho).  Congress will be lax to pull any rabbits out of their hat prior to November elections (heaven forbid they offend any corporate donors).  My feeling would be take a few months off from the market...........and come back end of July.  I feel the market will ramp up expecting a better second half....*IF* Congress is no longer in deadlock (fingers crossed).  I'd love to hear your thoughts on this.  Enjoy Jeff's post.  -Kos

By request today’s post consists of four seasonal pattern charts that have been presented here over the past several months. The first three charts are comparisons of 1-year seasonal patterns for “All Years,” “Midterm Years” and “2014 Year-to-Date.” When first presented on February 18, the conclusion was reached, based upon the seasonal patterns presented that a market top was likely in April. With the exception of NASDAQ, which peaked in early March, this has proven to be accurate thus far. If S&P 500 and DJIA follow NASDAQ’s lead lower and continue to track the midterm seasonal pattern, a meaningful move higher to new all-time highs will most likely not occur until later this year in the fourth quarter.

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This next chart was first published on February 20 and plots 1-year seasonal pattern of the 12 times since 1930 when the S&P 500 was down in January and then up in February which happened this year. The results here were also bearish however, the mere fact that January was down is bearish enough by itself as every down S&P 500 January since 1950 was followed by a new or continuing bear market, a 10% correction or a flat year. The resulting seasonal pattern in this scenario suggested a March top for S&P 500 and negative full-year performance.