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Stock market presidential cycle
Old 08-08-2014, 07:37 AM   #1
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Stock market presidential cycle

Another market prediction, this time based on the historical movement of the market during the second term of a US president. The author looked at S&P 500 data back to 1936 and found a relationship between the time a President had been in office and market movement. The chart below shows what historically happens during the 3rd year of a presidential term vs. the current S&P 500:

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It shows that the steep drop which began from the July 24 top is happening pretty much on schedule. A brief pause in the decline is due over the next few days, and then a resumption of the decline should appear. The ideal bottom equates to around Sep. 10, although the bottom to go up out of does not appear until a month later.

A few months from now, we’ll get to the bullish conditions of the 3rd year of a presidential term.
2nd Presidential Years Are Different | PRAGMATIC CAPITALISM
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Old 08-08-2014, 10:45 AM   #2
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Originally Posted by REWahoo View Post
Another market prediction, this time based on the historical movement of the market during the second term of a US president. The author looked at S&P 500 data back to 1936 and found a relationship between the time a President had been in office and market movement. The chart below shows what historically happens during the 3rd year of a presidential term vs. the current S&P 500:

2nd Presidential Years Are Different | PRAGMATIC CAPITALISM
Interesting idea, but seems awfully precise considering a low number of 2nd terms in his years studied.

Presidents are certainly more interested in their own survival and reputation than that of their party, so one might expect more vigorous effort to open up the gates near the first term midterm elections than near the end term.

It will be interesting to see how it plays this year. By the time there might be enough data to be meaningful, we may no longer be having elections!

Ha
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Old 08-08-2014, 11:47 AM   #3
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Took a look at the article mentioned. It always amazes me to what lengths people will go to make it appear that they have some "insight." 2nd term presidents, first termer from new party? I can think of a lot more permutations on this theme. Maybe he will clue us in on sunspots next.

Edit: I see at the bottom he does have more. "Entering the 3rd Presidential Year", "Seasonal Pattern", "A-D Line Divergence Again." Wow, can't wait for what he has next...
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Old 08-08-2014, 01:43 PM   #4
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Yeah the 2nd year thing but IIRC the 1st year is also bad (years 3 and 4 are good as they prime the pump of the economy for their re election) and look at last year's returns. I've stopped paying attention to these cycles just like sell in May (again look at last year) because when people start to act on these trends they fail to work.
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Old 08-09-2014, 10:37 AM   #5
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Is the presidential cycle about as good as the Super Bowl correlation thing?
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Old 08-09-2014, 10:38 AM   #6
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And less so than Tea Leaves.
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