The S&P 500 Continues to Follow Mid-term Election Year Seasonality

Overview

The article discusses the S&P 500's adherence to mid-term election year seasonality patterns, suggesting that the market is expected to follow a specific trajectory in the coming weeks. The analysis indicates a low around March 13 and a high approximately around March 20.

Seasonality Patterns

In a previous update from December 19, the author highlighted the significance of mid-term election year seasonality, predicting an important peak around April 18. The article outlines a pattern where the market typically experiences lows and highs at specific intervals, with the current year aligning closely with historical trends.

For instance, the article notes that a low was expected around March 7, a high around March 11, another low around March 13, and a larger peak around March 20. The actual market behavior has mirrored these predictions closely, with the index bottoming on March 6 and peaking on March 9.

Performance Analysis

The author provides a comparative analysis of the year-to-date performance against historical seasonality patterns. Out of eleven significant highs and lows during mid-term election years, the current market has matched eight of these occurrences, resulting in a 73% alignment with historical data.

Despite the historical performance not guaranteeing future results, the article suggests that the market is likely to continue following this seasonal pattern, with expectations of a bottom around March 13, a rally until approximately March 20, followed by a decline, and a final rally leading up to the April 18 high.

Conclusion

The article concludes with a cautious optimism regarding the S&P 500's adherence to historical seasonality. The author emphasizes the importance of monitoring price action for any deviations from expected patterns, advocating for a proactive approach in trading strategies.