The midterms are history, and so is a major source of uncertainty.
I realize that we have headwinds out there - tariff troubles, bearish moves by market-leading big tech stocks, and rising interest rates, to name just a few.
Right now, my technical, fundamental, and seasonal analyses show that we have a good probability of markets finishing strongly into year's end.
It's that seasonal analysis right now that's particularly interesting - and particularly strong.
I think that tendency is going to have a lot to say in the argument over just where we're going in the near- and intermediate-term...
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We're Reckoning with the "Presidential Cycle" Again
On Election Day last week, I spent almost all day at FOX Business Studios in New York, where I was asked to weigh in on the elections' impact on markets on two different shows.
It was a classic "carnival-type atmosphere" - and election days should be big news days.
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Interestingly enough, I ran into Eric Trump in the studio's green room. When he found out I was a market analyst, he asked me about the "Presidential Cycle."
If you're not familiar with it, here's the short version: The Presidential Cycle theory, developed by Yale Hirsch, author of the legendary "Stock Trader's Almanac," holds that U.S. stocks are weakest in the year following the election of a new president. After this initial weakness, the market improves until the next election.
I'll give it to him, he knows his stuff; Trump asked whether we could really expect a 15% rise in stocks fast on the heels of the election.
I told him that, yes, his numbers were right, and we're likely in store for a broad, 15% rise in stocks, but his timing was off - the pop doesn't happen as quickly as you might think.
Regardless of my talk with the president's son, I found throughout that day that the concept of the Presidential Cycle is widely talked about - but not widely believed.
Now, I'm working on some potentially very lucrative research intended to offer a wide-ranging set of data and trading ideas in support of the validity of the Presidential Cycle. I expect we'll get lots of dynamite trading opportunities from it. I'm looking at all kinds of data, including peer-reviewed academic papers and some well-known money managers who use the data.
I'll share that research and some trading recommendations based on it with my subscribers when it's ready.
But today I want to focus in on this particular quarter (three-month period) in the cycle.
Here's some great data from the folks at paststat.com on the six months starting at the end of September and ending at the end of March for this period of the Presidential Cycle:
This shows an average return of over 15% for this six-month period with only one in 17 of the occurrences since 1950 coming in negative, and at -0.93, it's just barely that.
Getting even more granular: This data from LPL Research shows that the current quarter, ending in December, has been the strongest out of all 16 of the Presidential Cycles:
The key takeaway from all this is, despite the remaining sources of uncertainty out there - politics, tariff and trade issues that arise and are resolved, and downward pressure on mega-cap tech stocks - the data looks fairly bullish heading into December. Plan and trade accordingly, and click here to learn how you can get my best trading research yourself.
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About the Author
D.R. Barton, Jr., Technical Trading Specialist for Money Map Press, is a world-renowned authority on technical trading with 25 years of experience. He spent the first part of his career as a chemical engineer with DuPont. During this time, he researched and developed the trading secrets that led to his first successful research service. Thanks to the wealth he was able to create for himself and his followers, D.R. retired early to pursue his passion for investing and showing fellow investors how to build toward financial freedom.