Election Cycle Turns Positive For Stocks Now

By on September 19, 2010

One of the most pervasive influences on the behavior of stock market returns has been the election cycle. The excellent Trader’s Narrative blog has posted a review of this phenomenon. An excerpt from their recent post:

In about 2 weeks we will enter the final quarter of 2010 and according to historical trends, this is the best time for equities within the election cycle. The best annual returns occur in the pre-election year (2011) but the “sweet-spot” starts one quarter earlier, at the end of the mid-term election year.

The following chart from Ned Davis Research shows how the average election cycle plays out for the S&P 500:

Click on graphic for larger image:

Source: Trader’s Narrative

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