Sunday , 21 April 2024

Stocks Struggle At Beginning Of Presidential Election Years – Here’s Why

This article shows you the typical patterns of the U.S. stock market in a presidential election year.

The typical election year under the magnifying glass

The chart below depicts the typical pattern of the Dow Jones Industrial Average (DJIA) in election years. In a way, it represents a seasonal chart, but with only every fourth year used in the calculation of the pattern. Thus it shows the average move in stock prices in election years since 1900.

DJIA, typical pattern of presidential election years since 1900

As the chart illustrates,

  • stocks tend to struggle at the beginning of election years. In the first six months the market on average enters a sideways trend with a moderate downward bias.
  • A rally begins only thereafter and establishes an interim peak in early November when the election actually takes place….

The fact that prices, on average, fail to rise in the first half of election years points to an elevated probability of price declines.

(…The election cycle also impacts other markets too. This is something you can take advantage of as a trader, investor or broker-dealer. To do so, visit either our web site and evaluate patterns on your own.)
Editor’s Note:  The above excerpts from the original article and follow up article by Dimitri Speck have been edited ([ ]) and abridged (…) for the sake of clarity and brevity.  The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.  Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

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