Presidential Election Cycle (9/30/2014)

During mid-term election years October, November and December have followed September as the three strongest months. Since 1930, the S&P 500 has gained an average of more than 2.5% in October, 2.0% in November and about 1.8% in December. If the pattern persists, these historically strong months will lead into the pre-election year of the Presidential Cycle.

As you can see by the chart, courtesy of Stock Trader’s Almanac, it has produced the best results by far than any other year of the cycle. Since 1900, the Dow has gained an average of 12.4% compared to the next best gain of 7.5% posted during election years. There has not been a losing pre-election since 1937 when Franklin Roosevelt was President. There have been 23 up years recorded versus only five down years. But some of those down years were whoppers as the Dow posted a loss of 52.7% in 1929, 37.7% in 1905 and 23.6% in 1901.

Year Cycle
Beginning
Party
President
Elected
Post-Election
Year
Midterm
Year
Pre-Election Year
Election
Year
1901
Republican
McKinley**
-8.7
-0.4
-23.6
41.7
1905
Republican
T. Roosevelt
38.2
-1.9
-37.7
46.6
1909
Republican
Taft
15
-17.9
0.4
7.6
1913
Democrat*
Wilson
-10.3
-5.4
81.7
-4.2
1917
Democrat
Wilson
-21.7
10.5
30.5
-32.9
1921
Republican*
Harding
12.7
21.7
-3.3
26.2
1925
Republican
Coolidge
30
0.3
28.8
48.2
1929
Republican
Hoover
-17.2
-33.8
-52.7
-23.1
1933
Democrat*
F. Roosevelt
66.7
4.1
38.5
24.8
1937
Democrat
F. Roosevelt
-32.8
28.1
-2.9
-12.7
1941
Democrat
F. Roosevelt
-15.4
7.6
13.8
12.1
1945
Democrat
F. Roosevelt
26.6
-8.1
2.2
-2.1
1949
Democrat
Truman
12.9
17.6
14.4
8.4
1953
Republican*
Eisenhower
-3.8
44
20.8
2.3
1957
Republican
Eisenhower
-12.8
34
16.4
-9.3
1961
Democrat*
Kennedy**
18.7
-10.8
17
14.6
1965
Democrat
Johnson
10.9
-18.9
15.2
4.3
1969
Republican*
Nixon
-15.2
4.8
6.1
14.6
1973
Republican
Nixon***
-16.6
-27.6
38.3
17.9
1977
Democrat*
Carter
-17.3
-3.1
4.2
14.9
1981
Republican*
Reagan
-9.2
19.6
20.3
-3.7
1985
Republican
Reagan
27.7
22.6
2.3
11.8
1989
Republican
G. H. W. Bush
27
-4.3
20.3
4.2
1993
Democrat*
Clinton
13.7
2.1
33.5
26
1997
Democrat
Clinton
22.6
16.1
25.2
-6.2
2001
Republican*
G. W. Bush
-7.1
-16.8
25.3
3.1
2005
Republican
G. W. Bush
-0.6
16.3
6.4
-33.8
2009
Democrat*
Obama
18.8
11
5.5
7.3
2013
Democrat
Obama
26.5
0
0
0
Total % Gain
179.3
111.4
346.9
208.6
Avg % Gain
6.2
4
12.4
7.5
# Up
15
16
23
19
# Down
14
12
5
9
*Party in power ousted **Death in office ***Resigned D-Democrat, R-Republican
Source: Stocktradersalmanac.com