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Stock Market SEASONAL TREND and ELECTION CYCLE

Stock-Markets / Stock Markets 2020 Nov 24, 2020 - 10:43 AM GMT

By: Nadeem_Walayat

Stock-Markets

Stock market seasonal trend is usually for a weak October followed by strong November and December, which this year is being disrupted by the election. So where the election cycle is concerned the first few months of a new presidency tends to be subdued, following which the bull market settles in and continues it's business as usual. So we could be heading for a subdued 5 to 6 months.


What happens when an Incumbent Republican President loses ?

Answer - Little movement in price for the remainder of the year. Given that Biden looks like he is heading for a win then that suggests to expect sideways price action into the end of the year, which means we are unlikely to see a surge to new all time highs.

What happens when an Incumbent Republican President Wins ?

Answer - A strong bull run. So if Trump pulls off another election miracle and wins then the Dow should soar to a new all time high by the end of December.

If there is no clear Winner on November 3rd?

Stock markets going to drop like a stone, how much? Easily 10%. The worst outcome, though I see as a very low probability event.

Stock Market Implications for US Presidential Election

The stock market's impact on the US Presidential election in terms of percent swing is pretty straightforward.

Q1. Are the stocks in a bull market ?

A: Yes, Add 1% swing in Trumps favour

Q2 - What is the deviation from 1st September when the election campaign proper began?

A: 26581 divided by 28,646 = 7.8% divided by 2 = 3.9%. Capped at 1.5%. Where in my update of a week ago on 23rd October it was 0.55%.

So basically the stock market trend of the past week acts to work against Trumps electoral chances for if he had little chance of winning a week ago, then the 7% drop during the past week has all but ended his electoral chances. Of course if the stock market had risen by 7% then that would have put Trump and Biden near neck and neck, but that is not what happened.

Whilst there will be some variance with Monday and Tuesday's trading, I doubt it's going to change the outcome now for what is likely to come to pass given that so much of the electorate has already voted early.

This analysis is an excerpt from my latest in-depth analysis that concludes in a detailed trend forecast for the stock market into January 2021.

Stock Market Trend Forecast into January 2021, Final Election Forecast Matrix

  • Stock Market Big Picture
  • Dow Short-term Analysis
  • Dow Long-term Trend Analysis
  • VIX Analysis
  • 2020 vs 2016 and 2012
  • ELLIOTT WAVES
  • Seasonal Trend / Election Cycle
  • Dow Stock Market Trend Forecast Conclusion
  • US Presidential Election Forecast Matrix Final Update
  • AI Stocks - AMD is Killing Intel

So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.

And ensure you are subscribed to my ALWAYS FREE newsletter for my next in-depth analysis.

Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2020 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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