From a historical perspective 2015 has been a major disappointment for the market. Pre-election years historically have enjoyed the best returns of the four year cycle. At today’s close, DJIA is once again negative year-to-date and lags the average pre-election year since 1900 by 8.6%. S&P 500 is clinging to a 1% year-to-date advance, but still lags by 7.6%.
Last week lagging pre-election years that were equal to or less than this year’s performance at the end of May were charted and painted a rather bleak picture for the balance of this year. In today’s charts the criteria was loosened to include all past pre-election years that lagged the average pre-election year using the sixth trading of June as the reference. For DJIA the cutoff was 8.26% and S&P 500 it was 8.55%. Any previous pre-election years that were less than or equal to these values on the sixth day of trading in June were selected. Even with these more optimistic criteria, it is clear that lagging pre-election years, on average, do not play catch up and tend to finish the full-year essentially flat.
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