We Like August In Election Years

It's hard for us not to be optimistic going into the month of August. Forget about all of the trendline breaks and multi-decade lows in bullish sentiment for just a minute and let's just look at seasonality. Specifically, focus on the typical late-summer buoyancy in stocks during election years.

According to the my trusty Stock Trader's Almanac, the Nasdaq has returned an average of 2.7% and the Russell2000 3.5% during the month of August during Election Years. The Dow Jones Industrial Average and S&P500 have also averaged positive returns since 1950 but lag the others returning just 0.8% and 0.9% respectively.

For you guys keeping score at home, this year's stock market has followed its historical pattern very nicely. This is a chart from Bespoke Investment Group showing the historical pattern for the S&P500 on election years going back to 1928 (in red, this year in blue). Look at August:

Sources:

August Best Month in Election Year (StockTradersAlmanac)

Can It Really Be That Easy? (Bespoke)

Tags: $IWM $QQQ $SPX $DJIA