Almanac Trader: Beyond Election Day: Day after to Yearend Examined
* November 9, 2016
Election Day has finally arrived and perhaps within a few more hours we will know the outcome. This time certainly has been different, but in many respects the market has performed similar to past presidential elections. The market was down in the two weeks prior to the election week. Historically the week before has a bullish bias while two weeks before it was bearish. The market was also up big yesterday, the day before, which has also been the trend since 1952. So what does history have to say about after the election?
In the following chart, November’s performance in “All Years” and Presidential “Election Years” over two time frames are compared. Over the more recent era, 1952 to 2012, November’s performance is very similar whether or not it is an election year. By the end of November S&P 500 has averaged right around 1.5%. Extending data back to 1930, S&P 500 performance in November does weaken, but the full-month remains positive.
Delving deeper into the data we examined S&P 500 performance on the day after Election Day, Election Week, from the close on the day after Election Day to November’s close and December’s close in the following table. The day after Election Day is solidly bearish regardless of timeframe with the S&P 500 posting average losses of 1.12% since 1932 and 0.78% since 1952. Full week performance is modestly bullish using 1932 to 2012 data, but noticeably weaker since 1952. From the close on the day after the Election until the end of November and December, S&P 500 performance is basically mixed, up only slightly more than 50% of the time, although it manages average gains of 0.66% and 1.80%, respectively, since 1952. Incumbent candidate and/or party victories are shaded in light grey.
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