Weak S&P500 Seasonal Strength in April and May in Election Year

wnd4

We’ve been reporting for a while now that election year seasonal tendencies are a bit different than regular years. The seasonal strength in April and May, which is usually obvious during average years, does not typically materialize during election years. In fact, equity markets tend to trade flat to negative in Election years from the beginning of April to the end of May due to the uncertainty of who will win the presidency. This leads into a stronger than average summer period, May through mid-July, as investors become more certain on the candidate that will take the top spot and begin to speculate on the impacts to the economy that will result from the president’s agenda. There is another effect in play that supports a similar pattern of a correction in April and May leading into a reasonably strong summer. Warmer than average winters, such as the one that just past, create seasonal distortions in economic data, which will influence the market slightly different than average years. Seasonal layoffs, particularly in the construction trade, are far less in warmer winters as inclement weather does not force typical temporary layoffs during the season. This results in the appearance of strong employment reports showing significant gains in hiring, which translates into positive stock market returns due to the appearance of economic strength. The truth is that hiring is not as great as what reports are showing, but that layoffs aren’t as severe. These workers typically laid-off or not hired during the winter season due to unfavorable weather conditions, such as extreme cold and snow storms, are normally brought back to work in the spring when conditions improve. This results in negative distortions, after taking into account seasonal adjustment factors, to reports released in the spring, resulting in negative pressures to equity markets due to the appearance of below average seasonal gains in hiring. Equity markets then rebound into the summer months from a seasonal low that falls on May 26th, on average. Both election year tendencies and the top 10-warmest winter years, according to Environment Canada, show that April 6 is the average peak to the positive seasonal trend before the April/May correction begins. Is this year going to be “Sell in April and go away”?

福多多

donalan

licai5688

ctcld

llyynnW

silicon_beaver

Ed02

bububaba

silicon_beaver

--- April 6 is the average peak to the positive seasonal trend before the April/May correction begins.

Good. two weeks to go.

Kami

DOW股市

Bencat

lite1067