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Chart Of The Week - Bear Election Seasonality
This week: the IPO boom & bust, Tech Wreck Check, seasonality signals, WTI crude oil price outlook, US Dollar and treasuries...
This email gives you a brief overview of what was covered in the latest Weekly Insights report including of course, the Chart Of The Week.
Chart of the Week - Bear Market Election Year Seasonality
Conditional Seasonality in Year-3 of the Election Cycle: This chart follows on from my post last year which looked at how stock market seasonality works in bull markets vs bear markets (and the findings kind of confounded some of the conventional wisdoms e.g. “sell in May“ only works in bear markets).
In terms of unconditional seasonality (looking at average moves in the market across the year through history), the typical all-years seasonal pattern is for the stock market to drift upwards in H1 then hit a rough patch around July through November before year-end rally.
In the 3rd year of the election cycle (this year) the positive H1 tendency is even stronger… except for “bear markets” — albeit this is a sample size of n=2 for 3rd-years of election cycles classified as “bear markets” (i.e. in this exercise defined as years where the market closed negative year over year: e.g. 2011 [-0.02%] & 2015 [-0.73%]).
The interesting thing is in the “bear” cases, it was a chop-fest, basically big ole range trade, except for that same July-Nov period where overall the 3rd year tends to be more patchy. It lines up with the idea of perhaps an OK H1 as sentiment may have gotten too negative too quickly, and a potentially poor H2 as recession hits and monetary headwinds mount.
Key point: Year 3 of the election cycle is typically positive in H1 (except for bears).
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Topics covered in the latest Weekly Insights Report
Aside from the chart above, we looked at several other charts, and took a bite out of some really important macro/asset allocation issues right now:
IPO Boom & Bust: documenting the IPO bubblet (and opportunities).
Tech Wreck Check: reviewing flows, positioning, valuations for next steps.
Cross-Asset Seasonality: seasonal signals for stocks, bonds, and US dollar.
Crude Oil Calculations: key charts on the tactical outlook for WTI crude.
Commodities vs USD: one’s breaking out, the other close to breaking down.
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