|Dow Jones Industrial Average
(Average Midyear Returns excluding dividends)
In view of the fact that 2006 is a midyear, it is appropriate to review historical midyear tendencies. The second
year of a presidential term is referred to as a "midyear". Therefore, every fourth year is a midyear. It is an
election year but not a presidential election year.
In the above table, the average monthly return has been compiled for the second year of each presidential term
from 1950 through 2005. October may be the month that most investors fear. But September has accumulated
the worst record with an average return of -1.88%.
The January - September period has typically lost 2.2%. October - December has been strong with a cumulative
gain of 7.5%. Therefore, all average gains accruing during midyears have occurred in the last three months of
the calendar year. The averages essentially tell a story of a poorly performing first nine months with September
sometimes producing severe downturns followed by a strong final quarter. An examination of daily charts would
show that September declines often extend into October.
Midyear Octobers have the best performance of any month at 3.14%. So midyear October-phobia is not
justified by history.
|How can I use this information?
For those looking for a buying opportunity, a September downturn may be it. If there is no September downturn,
the above evidence suggests buying prior to October.
If you have bearish positions, a September downturn may provide the best opportunity to abandon them before
the typically strong October - December period. If there is no September downturn, the above suggests that it is
time to reconsider those bearish positions before the October - December period begins.
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!
This issue of Investment Tips reviewed historical returns in terms of the presidential election cycle. If you would
like to see more information about the Presidential Election Cycle in future issues of SignalTrend's Investment
Tips, just fill out the "Suggest a topic" form below.
|Link to Previous Issue of Investment Tips
|Cyclic Theory Made Simple: Part II
Cyclic theory points to a major bottom in stocks.
Click the above link to see why.
|Will October Bring Profit or Pain?
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