S&P 500 Presidential Year Cycle for June-Oct

[equalizer]

“The theory has been described in interesting terms like “statistical fluke,” and “an accident of history.” Unfortunately, there are insufficient observations, given only 43 presidents in our country’s history, to scientifically validate the thesis and satisfy naysayers. Nonetheless, the theory has often been surprisingly accurate, although less so in more recent years.”

https://www.oppenheimerfunds.com/targetedCopy/InvestorPages/EOM/equityCommentary_ViewPoint.jhtml;sessionid=ZIUU2DRXVV1MNLARENV4GJQ?intcmp=investor_homepage_expert_commentary

The trend I posted is just one factor to analyze along with interest rates, P/E ratios, technical indicators including Dow Theory, etc. Richard Russell the permabear is bullish right now. Bob Brinker, whose newsletter is highly rated over 15 years by Hulbert Financial Digest is neutral to bullish now. P/E ratios are moderate. Overall sentiment is negative. The trend is also positive until Oct. The trend may be a fluke, but I wouldn’t go 100% neg now. My point is that it is not time to panic sell. Be defensive, but not all short.

Here’s article that discusses June to Oct. trends.
http://www.thestockadvisors.com/content/view/2123/9/

[LA_Renter]

Here is the big obstacle that I can see going through the balance of 2008. The S&P and many other analyst are projecting third-quarter profits to rise 14%, and fourth-quarter earnings to jump 62%.. Yesterday S&P downgraded credit ratings on Morgan Stanley, Merrill Lynch. and Lehman and the outlooks for all these firms are negative for the balance of this year, now if you ask me that is a sure sign of a solid rebound in earnings (snark).

[LA_Renter]

Here is the big obstacle that I can see going through the balance of 2008. The S&P and many other analyst are projecting third-quarter profits to rise 14%, and fourth-quarter earnings to jump 62%.. Yesterday S&P downgraded credit ratings on Morgan Stanley, Merrill Lynch. and Lehman and the outlooks for all these firms are negative for the balance of this year, now if you ask me that is a sure sign of a solid rebound in earnings (snark).

[LA_Renter]

Here is the big obstacle that I can see going through the balance of 2008. The S&P and many other analyst are projecting third-quarter profits to rise 14%, and fourth-quarter earnings to jump 62%.. Yesterday S&P downgraded credit ratings on Morgan Stanley, Merrill Lynch. and Lehman and the outlooks for all these firms are negative for the balance of this year, now if you ask me that is a sure sign of a solid rebound in earnings (snark).

[LA_Renter]

Here is the big obstacle that I can see going through the balance of 2008. The S&P and many other analyst are projecting third-quarter profits to rise 14%, and fourth-quarter earnings to jump 62%.. Yesterday S&P downgraded credit ratings on Morgan Stanley, Merrill Lynch. and Lehman and the outlooks for all these firms are negative for the balance of this year, now if you ask me that is a sure sign of a solid rebound in earnings (snark).

[LA_Renter]

Here is the big obstacle that I can see going through the balance of 2008. The S&P and many other analyst are projecting third-quarter profits to rise 14%, and fourth-quarter earnings to jump 62%.. Yesterday S&P downgraded credit ratings on Morgan Stanley, Merrill Lynch. and Lehman and the outlooks for all these firms are negative for the balance of this year, now if you ask me that is a sure sign of a solid rebound in earnings (snark).

[sdduuuude]

In order for this to mean anything, you need to also have stats for the non-presidential years.

[sdduuuude]

In order for this to mean anything, you need to also have stats for the non-presidential years.

[sdduuuude]

In order for this to mean anything, you need to also have stats for the non-presidential years.

[sdduuuude]

In order for this to mean anything, you need to also have stats for the non-presidential years.

[sdduuuude]

In order for this to mean anything, you need to also have stats for the non-presidential years.

[equalizer]

The stats May to Oct below are listed below. Again, not scientific – maybe superstitious, but just another indicator to examine. The same pattern exists in overseas markets as shown in second link. However, in presidential election years it is different, it has been more likely positive in June to Oct. Intuitively it makes sense, the White House will do all it can to keep their party in power, not sitting idle while market crashes. Of course market can still go down, but not as much if there is big effort to stop crash.

Look at the VIX, now at 23 was flashing caution on May 15, 2008 at reading of 16 and panic selling on Mar 17, 2008 at 32. VIX has been good indicator this this year, sell under 20, buy over 30. But guaranteed at 40, strong buy, very rare occurrence.

http://tinyurl.com/4f49fl (yahoo finance for VIX)

While the S&P 500 advanced an average of 7% during the November-April period over that span (without dividends reinvested), it posted an average gain of only 1.5% from May through October. What's more, the November-April period outperformed May-October 69% of the time." http://www.businessweek.com/investor/content/may2005/pi2005054_2535_pi039.htm "

Some of the reasons behind this may relate to patterns in bonuses, taxes and savings vehicles. For those who receive part of their compensation as bonuses, most are paid anywhere from December to March. This is a result of companies basing bonuses on the calendar-year results, or in some cases in the form of holiday bonuses. This creates a large cash flow for these individuals, and since more of bonus money is likely to be saved than salary payments, a large portion of this is saved, with a sizable amount invested in stocks or stock funds." http://www.bizjournals.com/boston/stories/2002/05/27/newscolumn7.html

[equalizer]

The stats May to Oct below are listed below. Again, not scientific – maybe superstitious, but just another indicator to examine. The same pattern exists in overseas markets as shown in second link. However, in presidential election years it is different, it has been more likely positive in June to Oct. Intuitively it makes sense, the White House will do all it can to keep their party in power, not sitting idle while market crashes. Of course market can still go down, but not as much if there is big effort to stop crash.

Look at the VIX, now at 23 was flashing caution on May 15, 2008 at reading of 16 and panic selling on Mar 17, 2008 at 32. VIX has been good indicator this this year, sell under 20, buy over 30. But guaranteed at 40, strong buy, very rare occurrence.

http://tinyurl.com/4f49fl (yahoo finance for VIX)

While the S&P 500 advanced an average of 7% during the November-April period over that span (without dividends reinvested), it posted an average gain of only 1.5% from May through October. What's more, the November-April period outperformed May-October 69% of the time." http://www.businessweek.com/investor/content/may2005/pi2005054_2535_pi039.htm "

Some of the reasons behind this may relate to patterns in bonuses, taxes and savings vehicles. For those who receive part of their compensation as bonuses, most are paid anywhere from December to March. This is a result of companies basing bonuses on the calendar-year results, or in some cases in the form of holiday bonuses. This creates a large cash flow for these individuals, and since more of bonus money is likely to be saved than salary payments, a large portion of this is saved, with a sizable amount invested in stocks or stock funds." http://www.bizjournals.com/boston/stories/2002/05/27/newscolumn7.html

[equalizer]

The stats May to Oct below are listed below. Again, not scientific – maybe superstitious, but just another indicator to examine. The same pattern exists in overseas markets as shown in second link. However, in presidential election years it is different, it has been more likely positive in June to Oct. Intuitively it makes sense, the White House will do all it can to keep their party in power, not sitting idle while market crashes. Of course market can still go down, but not as much if there is big effort to stop crash.

Look at the VIX, now at 23 was flashing caution on May 15, 2008 at reading of 16 and panic selling on Mar 17, 2008 at 32. VIX has been good indicator this this year, sell under 20, buy over 30. But guaranteed at 40, strong buy, very rare occurrence.

http://tinyurl.com/4f49fl (yahoo finance for VIX)

While the S&P 500 advanced an average of 7% during the November-April period over that span (without dividends reinvested), it posted an average gain of only 1.5% from May through October. What's more, the November-April period outperformed May-October 69% of the time." http://www.businessweek.com/investor/content/may2005/pi2005054_2535_pi039.htm "

Some of the reasons behind this may relate to patterns in bonuses, taxes and savings vehicles. For those who receive part of their compensation as bonuses, most are paid anywhere from December to March. This is a result of companies basing bonuses on the calendar-year results, or in some cases in the form of holiday bonuses. This creates a large cash flow for these individuals, and since more of bonus money is likely to be saved than salary payments, a large portion of this is saved, with a sizable amount invested in stocks or stock funds." http://www.bizjournals.com/boston/stories/2002/05/27/newscolumn7.html

[equalizer]

The stats May to Oct below are listed below. Again, not scientific – maybe superstitious, but just another indicator to examine. The same pattern exists in overseas markets as shown in second link. However, in presidential election years it is different, it has been more likely positive in June to Oct. Intuitively it makes sense, the White House will do all it can to keep their party in power, not sitting idle while market crashes. Of course market can still go down, but not as much if there is big effort to stop crash.

Look at the VIX, now at 23 was flashing caution on May 15, 2008 at reading of 16 and panic selling on Mar 17, 2008 at 32. VIX has been good indicator this this year, sell under 20, buy over 30. But guaranteed at 40, strong buy, very rare occurrence.

http://tinyurl.com/4f49fl (yahoo finance for VIX)

While the S&P 500 advanced an average of 7% during the November-April period over that span (without dividends reinvested), it posted an average gain of only 1.5% from May through October. What's more, the November-April period outperformed May-October 69% of the time." http://www.businessweek.com/investor/content/may2005/pi2005054_2535_pi039.htm "

Some of the reasons behind this may relate to patterns in bonuses, taxes and savings vehicles. For those who receive part of their compensation as bonuses, most are paid anywhere from December to March. This is a result of companies basing bonuses on the calendar-year results, or in some cases in the form of holiday bonuses. This creates a large cash flow for these individuals, and since more of bonus money is likely to be saved than salary payments, a large portion of this is saved, with a sizable amount invested in stocks or stock funds." http://www.bizjournals.com/boston/stories/2002/05/27/newscolumn7.html

[Author]

Posts