Ander's Market Theories

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I'm not certain when the next bottom will be put in place but I don't believe that the fourth quarter last year was all that similar to 1998's.

I do think that the NASDAQ and anything technology related is in a secular bear market. So we are on the same page.

Let me just post something based on COTD on the Election Year Cycles. All of the charts now are not up to date but you will get the point:

Election Year Cycles revisited using Chart of the Day Charts.

Note that it is important to understand where we are in each individual cycle and what the Federal Government and Federal Reserve is doing in response to current economic conditions:

Chart of the Day - The Presidential Cycle ( 3/2/2005 )

In terms of the presidential cycle, the market is fast approaching what has historically been the most difficult leg of the four-year cycle. Early in a new presidential term and with the next election several years away, the powers that be tend to be more willing to address such quaint topics as fiscal responsibility and balancing budgets. The downside to this 'belt tightening' is that it can be a drag on the economy. Today's chart illustrates how the market has performed following a presidential election year (plus or minus one quarter) high until the following mid-term year low. Stay tuned…



Chart of the Day - Mid Term ELECTION Year Bottoms ( From October 2002 )

On October 2, 2002, we mentioned that many significant bottoms have occurred during the mid-term ELECTION year. While it is still too early to determine if the bottom of October 9th was the start of a significant bear market rally (or bull market), the market has rallied nicely and is now trading 17% above those lows. As today's chart illustrates, a significant rally began in every mid-term ELECTION year since the early days of the Great Depression. It will be interesting to see if this go around will hold true to form. We'll keep you posted.

Notes: - The average duration of all the mid-term ELECTION rallies from 1930-2000 is 15 months.



Chart of the Day - ELECTION Year Tops

While the stock market has tended to perform well during an ELECTION year (especially during the summer), many major market tops have occurred during ELECTION years. Today's chart illustrates how the market has performed following a presidential ELECTION year (plus or minus one quarter) high until the following mid-term year low. Stay tuned…