January Stock Market Performance in Midterm Election Years | Jeff Hirsch

January during midterm election years opens strong across the Dow Jones Industrial Average, S&P 500, NASDAQ, and Russell 2000. All of them typically peak around Wednesday, January 7, and fade some 3% heading into Monday, January 26.

January opens strong, then fades – weak into around the 26th.

  

Reference:

Jeffrey A. Hirsch, January 7, 2026.

 

 S&P 500 Midterm Election Year Seasonal Pattern, 1949-2024.

  

A historical pattern where the S&P 500's first five trading days of the year rising over 1%—as seen in 2026 with

a 1.1% gain—correlates with positive full-year returns 87.1% of the time since 1950, averaging 15.7% gains.

 

 S&P 500's Average Daily Return and  Percent of Days Positive, for every calendar date (1950-2025).

 

See also:

Jeffrey A. Hirsch (December 29, 2025) - 2026 Midterm Election Year Seasonal Patterns.

2026 US Stock Market Forecast: 25% Bear Market and Recovery | Namzes

My base case for 2026 is a sharp but ultimately corrective bear market—approximately a 25% drawdown—followed by a meaningful recovery into year-end. Structurally, I expect a classic sequence: an early-year head fake, a multi-month liquidation phase, and a strong fourth-quarter rally.

 

 2026 Forecast for the S&P 500 (green line):

■ Rally into ~Feb 17 toward 7,250–7,400; topping risk, minor low ~Mar 27.
■ Acceptance below 6,532 confirms top; 6,144 next, then risk to low-5,000s.
■ Cycle lows: Jul 24 (major low, sharp rally) and Oct 27 (3.5Y trough, cleaner divergent entry).
■ Downside ~5,200 (4,600–4,800 extreme), followed by Q4 rally to ~5,950.

 

■ The bullish advance should extend into mid-February, with the S&P 500 potentially pushing into the 7,250–7,400 zone. Up to approximately February 17, the trend should remain constructive, but I will be watching closely for topping signals and negative divergences as that window approaches. A minor corrective low is likely around March 27.

■ The first serious warning that the market has topped will be acceptance below 6,532. If that level gives way, the next downside objective is 6,144. A sustained break below 6,144 materially increases the probability of a deeper liquidation that carries the index into the low-5,000s.

■ I am focused on two potential windows for a major cycle low: July 24 and October 27, the latter aligning with a projected 3.5-year cycle trough. My expectation is that July produces an important low, followed by a sharp rally. However, the more attractive risk-adjusted opportunity may come in October, where a lower low accompanied by positive divergence would offer a cleaner and more durable entry.

■ In terms of price targets, my central downside objective is near 5,200. In an extreme scenario, the lower bound of the range would be 4,600–4,800, while the upper bound of the bear-market low region sits around 5,400–5,600. From there, I expect a powerful fourth-quarter rally, with a year-end target near 5,950.

From a longer-term perspective, the decennial pattern also supports this roadmap (see chart below). Year six of the cycle is historically choppier. Across 23 prior observations, the average profile shows a push higher into February, followed by a volatile and corrective phase, and ultimately a year-end rally. As noted in my 2025 forecast, year five is typically the strongest year of the cycle; even after the spring 2025 crash, the market recovered impressively, consistent with that tendency.

 

 Dow Jones (monthly candles), 2023-2027.

» In my 2025 forecast, I noted that year five is typically the strongest year in the decennial cycle, and that even

after the spring crash the market recovered impressively. Year six, by contrast, is usually much choppier. «

  Dow Jones (daily bars), 2025-2027.

» The de-trended decennial pattern, shown in grey with matching years in orange, 

conveys the same structure: early advance, decline, consolidation, and a year-end rally. «

 

The same decennial pattern, shown on a de-trended basis above, reinforces this view. In the comparative analysis, the de-trended data appear in grey, with selected analog years highlighted in orange. The message is consistent across both views: an early advance, a meaningful decline, extended choppiness, and a decisive rally into year end. 

 

Dow Jones historical study looking for similar periods: 1966 (green) is best overall fit.

 

 Dow Jones composite (magenta) of a dozen best matching years.

 

2026 Hurst Cycles Playbook for the S&P 500: Following the November 21 (Fri) 40-week cycle low and the December 19 (Fri) 40-day cycle higher-low confirmation, the S&P 500 is now in a new 40-week cycle uptrend. Though a 40-day cycle pullback is expected in late January, the rising 20-week cycle should drive the S&P 500 higher toward around the February 20 (Fri) option expiration.

Q1 rally, mid-year correction, July and October windows for yearly low, rally in Q4.  

 

Building on prior calls like the accurate November 2025 low, the chart above illustrates July 2026 as an ideal nested low for multiple cycles (20-week, 40-week, possibly 18-month and 3.5-year or 42-month).

 

Reference:

Namzes (December 31, 2025) - 2026 Forecast: 25% Bear Market and Recovery. 

[Additional commentary and other asset forecasts will follow in the thread over the coming weeks.] 

 

Bitcoin: 2025 largely played out in a typical 4Y cycle way (top panel). Bottom panel is Hurst cycles projection from Dec 2024. April was 18M low; Nov - 40W low. I expect a push higher early in 2026 before cycle rolls over and we go towards 4 year cycle low.

The 2026 Dollar Playbook.

The 2026 Euro Playbook.

See also:

Namzes (December 27, 2024) - 2025 Outlook on S&P 500, Cryptos, Currencies, Metals & Energy. 

TPR (December 29, 2025) - 2026 Midterm Election Year Seasonal Patterns of US Stock Indices. 

Larry Wiliams (December 23, 2025) - 2026 Market Forecast: Cycles, Risks, and Opportunities.

2026 Midterm Election Year Seasonal Patterns of US Indices | Jeff Hirsch

Within the four-year presidential cycle, the midterm year represents the weakest phase for equities. It is characterized by low single-digit average returns and the cycle's deepest intra-year pullbacks. However, it also sets the stage for the most reliable and profitable recovery rallies, which typically extend well into the following year. Historical data on years ending in "6," dating back to 1806, show that 85% closed higher, with only four instances of declines. Hurst cycles project 9-month troughs for January and October 2026 (as illustrated in the charts at the end of this article).  

 

 Midterm Election Year Seasonal Pattern.

 

The first chart above shows the average seasonal performance of the DJIA (blue), S&P 500 (black), NASDAQ (green), and Russell 2000 (grey) from 1949 to 2024. All follow a consistent trajectory: a period of weakness from January through September, with average cumulative declines of 2–8%, followed by a fourth-quarter recovery that pushes annual returns toward positive territory.

6th Years of President Term Seasonal Pattern (1949-2024).

 

6th Year of 10-year Cycle Seasonal Pattern (1949-2024). 

 2026 Scenarios.

The next chart focuses on the S&P 500, comparing the broader midterm average (blue) against the sixth year of a presidency (red), second-term Republican midterms (green), and Jeffrey A. Hirsch's Stock Trader’s Almanac aggregate cycle (black). Across all categories, early-year gains eventually yield to mid-year volatility, and a strong rally consistently emerges from October onward.

 

 S&P 500 Midterm Election Year Seasonal Pattern, 1949-2024.

 

The second-term Republican midterm cycle (green) begins with a minor January dip, followed by a steady ascent that peaks at roughly 6-8% by April-June. After third-quarter volatility—where gains typically compress to a 1% floor in September—the market enters a year-end rally exceeding 8% by December.
 

 Performance of the S&P 500 during the Presidential Cycle: 
Midterm Years see both the largest pullbacks, and the best recovery rallies.

 S&P 500 Peak-to-Trough Declines in Midterm Election Years, 1950-2022.

The table above outlines every S&P 500 peak-to-trough decline during midterm election years between 1950 and 2022. These declines averaged 17.3% over 115 calendar days, typically beginning in late April and finding a floor by mid-August. However, all of these declines consistently acted as springboards, fueling recovery rallies that averaged 31.7% gains one year later.

 

 Edgar Lawrence Smith (1939) - Tides in the Affairs of Men: 

An Approach to the Appraisal of Economic Change.

  

2026 in the Four-Year Presidential Cycle aligned with the Decennial Cycle. 

 

 J.M. Hurst's 18-Month Cyclic Model: Component cycles

and the aggregated Composite Cycle (thick black line).

 

 

While the ideal period for Hurst’s nominal 40-week cycle (also known as the 9-month cycle) is 272 days (38.86 weeks), current data from TimeSeriesSCC and Sentient Trader indicate a shorter realized average in the S&P 500 and NASDAQ. Over the last ten iterations, the measured 40-week cycle has averaged 257 to 262 days (36.7 to 37.4 weeks).

Projecting this duration forward from the major troughs of April 7 and April 21, 2025, the next 40-week cycle trough was initially expected to occur in a window between December 20, 2025, and January 8, 2026. However, considering the recent 80-, 40-, and 20-day troughs—including those from the DJI, NDX, ASX, DAX, NIFTY, and BTCUSD—shifts the projected window toward mid-late-January.

 

 

 Blancmange Curve.

 Gold, Midterm Year Seasonal Pattern (1975-2024).

 

 Silver, Midterm Year Seasonal Pattern (1973-2024).

 

 

 Copper, Midterm Year Seasonal Pattern (1973-2024).

 

Crude Oil, Midterm Year Seasonal Pattern (1984-2024).

 

Natural Gas, Midterm Year Seasonal Pattern (1991-2024).

See also: 
Larry Wiliams (December 23, 2025) - 2026 Market Forecast: Cycles, Risks, and Opportunities.

Jeffrey A. Hirsch (December 23, 2025) - 2026 Market Forecast & Outlook: 6th Year of Presidency. 

Jeffrey A. Hirsch (2011) - S&P 500 Projection Chart from 2009 to 2025.

2026 Market Forecast: Cycles, Risks, and Opportunities | Larry Williams

Professional bears and purveyors of pessimism often emerge at this time of year with gloom-and-doom narratives. While there are indeed periods to adopt a bearish stance, currently such warnings should be approached with caution. 

  

The standout stock of 2025 has been Nvidia. My forecast for the first few months of 2026 suggests a decline into mid-February, followed by a strong rally into April. On a longer-term basis, indicated by the blue line representing the extended cycle, Nvidia has historically rallied approximately 75% of the time during similar periods. This pattern is expected from mid-February into May, presenting a favorable opportunity for Nvidia investors.

 

Edgar Lawrence Smith's research in the 1930s profoundly influenced Warren Buffett. Smith demonstrated that stocks outperform bonds over long periods, particularly through compounding via retained earnings in growing companies. Buffett emphasized firms with disciplined reinvestment of profits. Smith also identified a dominant 3.5-year cycle in stock prices. Out-of-sample testing from 1930 onward reveals cycle lows that marked excellent buying opportunities in 1995, 1998, 2002, 2005, 2008, 2012, 2016, 2019, and 2023. This cycle points to another potential buying opportunity in 2026. 

 

Historical data on years ending in "6," dating back to 1806, show that 85% closed higher, with only four instances of declines. Additionally, after three consecutive up years, the fourth year has been positive eight out of eleven times. These patterns suggest high odds for continued upward momentum, provided supportive fundamentals persist.

 

The M2 money supply exhibits a cycle of approximately six to seven years. Lows in this cycle have historically aligned with bull market advances, as seen from 1960 onward. The next upswing is projected for 2026, introducing a bullish bias, though not guaranteeing a straight-line rally. 

 

 

In summary, 2026 is likely to feature higher stock prices, declining interest rates, and rising inflation. I expect an historic buy point for US stocks. For detailed forecasts, visit iReallyTrade.com starting January 1.

Reference:
Larry Williams (December 23, 2025) - 2026 Market Forecast: Cycles, Risks, and Opportunities. (video)
Larry Williams (January 1, 2026) - Forecast 2026.

 

» This is the best market to trade in 2026. «

  

See also:

Larry Williams (September 25, 2025) - US Stock Market Outlook for Q4 2025. 

Larry Williams (December 24, 2024) - 2025 US Stock Market Outlook: The Good, the Bad, and the Ugly.

The Year-End Rally and January Effect in US Stocks | Jack Gillen

American financial astrologer Jack Gillen (1932-2022), best known for his book The Key to Speculation on the New York Stock Exchange, attributed the Year-End Rally—often called the "Santa Claus Rally"—to the Sun's annual cycle and its interactions with key points in the natal charts of the New York Stock Exchange (NYSE) and the United States. In Chapter VIII ("Year-End Rally") Gillen framed this as a predictable seasonal pattern driven by planetary transits, rather than purely economic factors, emphasizing that markets follow cosmic rhythms with mathematical precision. 

 

NYSE Natal Chart (New York, NY, May 17, 1792 8:52 am).

 

United States Natal Chart (Philadelphia, PA, July 4, 1776 12:30 pm). 

Core Astrological Mechanism: Gillen explained the rally as a direct result of the Sun's transit through Capricorn (around December 22–January 20), specifically when the Sun reaches 5–9 degrees Capricorn. This position forms a harmonious trine aspect (120-degree angle) to Venus at 5 degrees Taurus in the NYSE's natal chart (May 17, 1792). The trine creates bullish energy, boosting prices and volume as the Sun—a symbol of vital energy and trends—activates fixed, stable points in the market's "birth chart."

 

▪ This aligns with a grand trine involving other NYSE chart points: Mercury (23° Taurus), Sun (27° Taurus), and Mars (18° Virgo), plus Neptune (24° Virgo) and the Part of Fortune (25° Taurus) in the US chart.

▪ Capricorn, ruled by Saturn, governs government policies and market conditions (within a 4-degree orb), but the trine's positive flow overrides restrictions, leading to upward momentum from Christmas to New Year's.

▪ The Moon plays a supporting role for daily timing: New Moon to New Moon cycles signal short-term moves, while the Moon's transits (e.g., from Virgo to Pisces) enhance long positions during this period.

 

Broader context: The Sun's 365¼-day cycle through the zodiac creates annual highs (January to late July, Aquarius to Aries) and lows (late July to October, Leo to Libra). The year-end rally acts as a "reset," balancing the year's trend, with the US chart's Cancer cluster (opposed by Capricorn) adding tension that's resolved bullishly.

 

Historical Patterns and Reliability: Based on data from 1900–1970 (which Gillen noted holds pre-1900 as well), the DJIA closed higher on the last trading day of the year 86% of the time (only 11 minus closes). Gains averaged positive, with the largest in 1967 (+17.74 points) and the biggest loss in 1966 (-13.61 points). Exceptions occur ~14% of the time due to disruptive factors like:

▪ North Node squares to US Jupiter in Cancer (e.g., 1911: -0.43%; 1930: -0.62%; 1968: -8.57%).

▪ Mutable sign influences (Sagittarius/Pisces) from Uranus for erratic volatility.

 

 

Gillen tied this to longer cycles:

▪ Sun's 19-year eclipse cycle (6,585.321 days): Shifts trends via Moon-Sun eclipses.
▪ Jupiter (12 years/sign): Expansion highs (e.g., Jupiter in Leo in 1978 amplified rallies).
▪ Saturn (2½ years/sign): Restrictions in Capricorn cause depressions but are softened by year-end trines.
▪ Uranus (7 years/sign): Erratic breakouts in mutable signs.

 

Volume is crucial: It builds during rises (buy signal) and declines during falls (sell signal), mirroring the DJIA's tide.

 

Connection to the January Effect and Yearly Trend: A hallmark of Gillen's analysis is the January-year-end symmetry: "If the market shoots up in January, it will be up in December; if it’s low in January, then it's going to be low in December, at year's end." This ~80% accurate "balance" reflects the Sun's opposition (Cancer-Capricorn axis) resolving the year's energy. January's bullish tide (Aquarius ingress) sets the tone; low volume in weak months (February–March, July–August, October–November) tests but doesn't break the cycle.

 

Predictions and Trading Advice: Gillen predicted the rally persisted "year-after-year" unless heavily afflicted (e.g., Saturn in Capricorn for panics like 1929). For 1979 (his writing era), he forecasted lows in stocks like PPG Industries ($14–15) due to Saturn, but highs via Jupiter returns. Modern application: Monitor Sun aspects and volume—afflictions intensify bear phases, trines soften bulls.

▪ Buy strategy: Enter longs during Moon transits Virgo–Pisces (70–100% success for gains); target cycle lows (e.g., Gould, Inc. at $10 in Dec/Jan–Feb).

▪ Sell strategy: Exit at resistance highs (e.g., $26–$28); avoid weak months.

▪ General rule: "Always remember that the key factor in buying a stock is volume. As the volume builds, the prices rise. When volume declines prices fall." Align trades with corporate "birth signs" and ride the DJIA tide rather than fighting cycles.

Gillen's approach blends astrology with empirical stats, viewing the rally as cosmic inevitability rather than luck. For deeper dives, his book details tools like sensitive Sun/Moon degrees for precise timing. While unconventional, his methods have influenced financial astrology, with historical backtests showing high consistency.

Jack Gillen based his analysis primarily on data from 1900–1970. Below are the exact statistics he presented in The Key to Speculation on the New York Stock Exchange (Chapter VIII), followed by updated figures through 2024 for the Dow Jones Industrial Average (DJIA) and S&P 500.

  

Jack Gillen’s Original Statistics (1900–1970, DJIA).

 

Gillen emphasized that the 10–11 failures almost always coincided with heavy nodal afflictions (North Node square or opposition to US Jupiter or NYSE Venus) or strong Saturn restrictions.

Updated Statistics (1900–2024, 125 years) – DJIA.

S&P 500 Year-End Last Trading Day (1950–2024).

 

Classic “Santa Claus Rally” Definition: The last 5 trading days of December plus the first 2 trading days of January (7 trading days total).

 

 "Santa Claus Rally" Stats for the DJIA and S&P500 (1950-2024).

 

Notable Recent Exceptions (Failures of the Year-End Rally) 

 

▪ From 1900–1970: Gillen’s claimed 86% success rate for the final trading day is accurate for that specific sample.
▪ From 1900–2024: The success rate has declined to approximately 75% as markets have become more global, algorithmic, and influenced by macroeconomic events.

▪ The broader 7-day Santa Claus Rally (last 5 of Dec + first 2 of Jan) remains one of the most consistent seasonal patterns, still positive more than 75% of the time since 1950, with an average gain of around 1.3–1.4%.

 

Gillen’s core astrological thesis—that the Sun’s trine to NYSE Venus in early Capricorn drives the rally—continues to align with the majority of positive outcomes, although the edge has moderated in recent decades compared with his original 20th-century sample.

 

So what about the turn of the year 2025-2026? The usual year-end rally should still show up, with the Sun making its normal supportive link to the NYSE chart. But Saturn’s square to natal Venus (December 8), North Node pressure, and Uranus conjunct the NYSE Sun (December 30) introduce stress and the risk of sudden drops. The Moon’s difficult angles on December 24–25 and January 1 can briefly stall momentum, making the “Santa Rally” weaker and choppier than usual — upward overall but marked by sharp dips and low-volume days. Jupiter’s trine supports a rebound around January 3–10, but December 23–January 2 still favors light shorts. Overall: a cautious, shortened rally, not a full failure.
  

Reference:
Jack Gillen (2002) - Astro-Stats for the NYSE.