Avoid the Noise, Here’s the Facts

November 12, 2019  |  Michael Reilly

According to the Stock Trader’s Almanac, the Pre-election year of a 4 year Presidential cycle is historically the strongest year for market gains.

And so far, the cycle has not disappointed – as major U.S. markets are soaring to all-time highs.

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Sometimes, we can get so wrapped up in the markets or day to day life, that weeks and months can pass as quickly as the second hand on a clock.

It’s hard to believe we are fast approaching Thanksgiving and the beginning of another holiday season.

Soon, 2019 will be in the books, marking the end of the pre-election year and its historically strong returns.

Before we know it, January will be upon us and investors will reflect on the prior year’s successes or failures, perhaps considering what the new year may bring.

It’s likely 2020 will see U.S. presidential campaign politics increasingly focus on domestic political disputes, standoffs and unfinished business – as well as impeachment proceedings.

However, as we enter the 2020 election year, we will remain optimistic – as long as the technical data we track continues to improve.

Right now, a possible deal with China on trade, an economy that is still growing and Fed policy on interest rates that remains accommodating are all contributing to a positive mood on Wall Street, resulting in strengthening price behavior for equities and the many technical indicators we use to track them.

Investors looking for further historical perspective regarding the Presidential election cycle may be interested in data from The Stock Trader’s Almanac, indicating that election years have historically been the second best year of a 4 year Presidential cycle for the markets.

The data reports that, since 1952, the S&P 500 is up 12.5% in election years (on avg.) when a sitting president is running for reelection.   

The S&P 500 is down 1.5% in election years with an open field, when no incumbent is running for a second term.

And on average, the “market” (S&P500) is up 6.7% across all election years.

So, regardless of opinion, Presidential incumbency seems to play an important role in these 4-year Presidential Cycles. 

Any Adapt readers out there that have followed us for any length of time have often heard me say that when it comes to making investment decisions, it often comes down to the weight of the evidence…

Avoid the noise, avoid the pundits and their own private agendas… and instead find clarity in price behavior. 

You see, it doesn’t matter what anyone is saying – it matters what they’re doing – and the “tell” is in price and the ever changing relationship between supply & demand.

Today, both price and participation are rising, causing markets to break new highs. We are seeing more broad based participation both in U.S. markets and in markets abroad. 

Both small and mid cap markets are once again joining large cap stocks in moving markets higher. This suggests a healthy market environment.

All this data indicates that the market remains strong, and that we can expect that strength to continue for the near future.

This is a good time to ensure your portfolio contains securities with the highest relative strength scores. This indicates that they’re outperforming both the market and their peers and stand the strongest chances of high gains.

If you’re not sure about the overall “strength” of your current portfolio, you may want to consider calling Rowe Wealth at 866.711.2836 ext 3. 

Our advisors provide completely free portfolio evaluations to investors with at least $500,000 in investable inventory or income. These evaluations will allow you to capture an accurate assessment of how much you stand to gain or lose over the next six months and identify areas where risk can be reduced without sacrificing profit potential.

Call 866.711.2836 ext 3 today to learn more.

As always, invest wisely.

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