Since 1949, the typical pattern of a Post-Election Year is generally flat until late March. The second and
fourth quarters are notably bullish, while the first and third quarters
tend to be less so. A significant correction in the third quarter is usually followed by a bull trend into year-end. Since 1981, the average trend in Post-Election Years has followed a similar structure but with consistently higher returns.
Spring Low – Summer High – Fall Low – Bull into Year-End.
Average performance of all Post-Election Years
since 1949 +8%, since 1981 +15%.
That said, Post-Election Year returns have historically favored 1st-Term Democrats. Since 1949, there has been only one instance of a loss during a Post-Election Year with a 1st-Term Democrat, while 4 out of 6 1st-Term Republicans saw losses.
Data suggests caution in the third quarter during a 1st-Term Republican administration, and the first quarter is typically the worst-performing. Swing traders should wait for the Spring Low to occur between late March and early April before entering long positions. Post-Election Years generally show strong second-quarter performance with a consistent bull trend from the Spring Low to the Summer High (which can occur as early as mid-May), with an average return of around 4%. The Summer High period, from June
to August, sees positive returns only in about one-third of
Post-Election Years.
