How can I use this information?
You may have been considering adding to your stock holdings in anticipation of a typically robust third year
return.  History suggests that you move new money into the market at the beginning of the year rather than
adding funds incrementally throughout the year. (The vast majority of third year gains have occurred by August.)

Don't assume that a major correction will not occur during 2007. It has been a long time since this market has
experienced a correction of 15% or more. 1987 proved that a major correction can occur during the typically
strong third year.

Even though the third year is historically very strong, maintain diversification among asset classes and timing
methods.

SignalTrend's unemotional computer timing system is currently bullish, but it may change its buy / sell
signal in the near future. If that happens, SignalTrend will notify you by email. Remember, SignalTrend's
stock market timing system was backtested 100 years with excellent results!

P. S.
Some of the above research in this issue of Investment Tips was initiated by a request from one of SignalTrend's
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Signals the Trend... in Stocks and Interest Rates                  Backtested 100 Years !
12/29/06
The Presidential Election Cycle is Bullish: Part II
Proprietary Graphs, Tables and Analyses - All Rights Reserved
Observations:
● 2007 is the third year of the four year Presidential term.
● The third year has averaged 19% per year since 1949 (excluding dividends).
● The third year has averaged 17% per year from January 1 through August.
● The Crash of 1987 occurred in the third year of President Reagan's second term.
Summary:  The monthly price returns for the third year of Presidential terms are presented in this issue.
Third years, on average, have achieved a 17% gain by August and a 19% gain by year-end. The best third
year return was 34% in 1995. 1987 was the worst year. It achieved a 36% gain by August, crashed to record
a 5% loss as of November's close but still eked out a 2% gain by year end.
More
Note for non U. S. subscribers:
U.S. Presidents serve for a four year term. Presidential elections are held in November of the fourth year.
Presidents begin the first year of their term in January of the year following the November election.  President
Bush was elected to his second term in November of 2004. The first year of his second term was 2005.
Accordingly, 2007 is the third year of this Presidential term.
Congressional elections occur in both the second and fourth year of each Presidential term. (e. g. 2006 and 2008).
The election held in November of 2006 was a Congressional election.
Stock History
Jan        Feb       Mar       Apr       May     June     July       Aug      Sept      Oct       Nov       Dec
-0%
Worst (1987)
Best (1995)
15%
30%
25%
20%
10%
5%
Average
- 10%
- 5%
Third Year of Presidential Term: 1950-2005
35%
Monthly close for the S&P 500. Dividends not included.