After two weeks of enjoying the Australian summer at the beach house, I've returned to my desk! I hope everyone had a lovely Christmas and celebrated the start of the new year with family and friends!
Let's start the year off with some cycle data…
Stocks historically do not perform well in the first quarter of a post-election year.
Here’s the chart:
(right-click and open image in new tab to zoom in)
Let's first break down what the chart shows:
This blue line represents the average return in post-election years since 1950 for the S&P 500.
The Takeaway: The stock market rewarded bulls over the past 12 months, as 2024 was one of the best election years ever!
However, I began to notice a shift in the environment at the end of last year, and when we take a look at the current weight of the evidence, it is now tilted bearish.
The historical weakness of the first quarter in a post-election year is just another data point that poses a challenge for stocks.
Given this context, I wouldn't be surprised to see some selling pressure on stocks here.
Obviously, I have no idea what the stock market is going to do, even if all the data suggests that this could be a time when it takes a breather.
That said, not all stocks need to go down or move sideways…
Grant Hawkridge | Chief Aussie Operator, All Star Charts
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