Post Election Year Expectations
By LawrenceI have written about the Presidential Election Cycle at Seeking Alpha last year. It is a good time to review the statistics and see what is in store this year.
Last year’s year high was correctly projected by the potential high zone for the year using the election year statistics. It shows that even though the stock market can be moving wildly throughout the year, it still follows certain characteristics it has over the years.
This year is the post election year. From the statistics I presented in the article it is clear that this particular year is weaker on median measurement basis.
In fact, it is the year where the median return, on close to close basis, is slightly negative.
Opportunities will present themselves when the overall market tagging either one of the projected extreme. Whichever reached first, be that the median year high gain or the median year low loss, while the other extreme is far from tagged, will be great for long term swing setup where the market may reverse course to gun for the other extreme.
Dow Jones Industrial Averages 2012 closed around 13,102.
For the upper boundary, there is a 50% chance of year high to reach 14,634.
For the lower boundary, there is a 50% chance of year low reaching 10,979.
By 2nd quarter of this year, if the market is still holding onto its gain without any significant selloff, then it is a good time to scale back on the long side and forget about the upside like last year because it is likely the year will end in a wash.
Keep these levels and overall strategy in mind for long term planning purpose.
Opportunity favors the prepared mind.
