« Looking at Long-Term Credit Spreads | Main | Earnings Preview: Bed Bath & Beyond »

Out of boredom, this weekend I looked at all the Dow daily closings for the last 111 years (about 28,000 points of data) for a closer examination of the Presidential Election Cycle’s impact on stock prices. (What the hell was I thinking?) I did this before, but that only for the data from 1930 to mid-2006. This time, I looked at the every day from 1896 to last Friday.

I don’t put much faith in these types of trading rules, but there are some interesting results. Historically, the Dow has gained an average of 24.1% from September 30 of the mid-term election year to September 6 of the pre-election year, which we recently passed.
This means that nearly two-thirds of the Dow’s four-year gain (24.1% of 36.7%) comes in less than one-quarter of the time. That’s a pretty stunning stat.

After September 6 of the pre-election year, the Dow has historically pulled back 5.2% to May 29 of the election year. After that, it puts on a nice 23.2% climb to August 3 of the post election year. Then trouble starts. After September 3, the Dow then pulls back 5.6% and we’re back at our starting point, September 30 of the mid-term election year.

Also, Leap Day is a positive day for the Dow, up an average of 0.1256%.

Posted by edelfenbein at September 24, 2007 2:35 PM