{"id":34375,"date":"2023-07-11T20:13:31","date_gmt":"2023-07-12T00:13:31","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/this-critical-support-for-stocks-is-no-longer-propping-up-the-market\/"},"modified":"2023-07-11T20:13:33","modified_gmt":"2023-07-12T00:13:33","slug":"this-critical-support-for-stocks-is-no-longer-propping-up-the-market","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=34375","title":{"rendered":"This critical support for stocks is no longer propping up the market"},"content":{"rendered":"
\n
<\/p>\n
\n

\n \u201c<\/span> The boost the stock market has received since last October from the resolution of election uncertainty has now played itself out. \u201d<\/span>\n <\/p>\n<\/p><\/div>\n<\/p><\/div>\n

The bull market has lost a major support: The presidential election year cycle no longer calls for significantly higher U.S. stock prices.<\/p>\n

On June 30, this cycle flipped from supporting better-than-average prices to lower-than-average ones. Assuming the future is like the past, this period of below-average prices we\u2019ve just entered will last for more than a year.<\/p>\n

\n

Clients are surprised when I tell them this unpleasant news, since they\u2019re under the impression that the third year of the presidential term \u2014 the one we\u2019re in now, of course \u2014 has historically been the best for the stock market. Though they\u2019re not wrong, this historical tendency comes with two major qualifications. The first is that the research documenting a strong third-year effect in the stock market focused on fiscal years beginning on Sept. 30, so the current third year has less than three months to go in any case.<\/p>\n

The second qualification is that the above-average gains produced by past third years was front-loaded, as is evident from the accompanying chart. Notice that, while the Dow Jones Industrial Average
\n DJIA,
\n +0.93%<\/bg-quote>
\n has produced well-above-average gains in the first three quarters of third years, it is a below-average performer in the fourth quarter. And this period of below-average performance lasts until the fourth year\u2019s fourth quarter.<\/p>\n

A genuine pattern<\/strong><\/h2>\n

Increasing our confidence that this presidential-cycle pattern is genuine is the strong theoretical foundation on which it rests. Consider a 2021 study by Terry Marsh of the University of California, Berkeley, and Kam Fong Chan of the University of Queensland in Australia. They found that third-year strength traces to the resolution of uncertainty that occurs when the mid-term elections are over. (As you can see from the chart below, there is a similar pattern before and after the presidential election as well.)<\/p>\n

<\/p>\n
<\/p>\n
<\/div>\n<\/figure><\/div>\n

Last year\u2019s mid-term elections provided a perfect illustration of this pre-election uncertainty and the post-election resolution of that uncertainty. No one knew whether control of the House or the Senate, or both, would stay with the Democrats or shift to the Republicans. Sure enough, the stock market declined over the quarters leading up to that election \u2014 with the Dow losing 20.9%. But once that uncertainty was resolved after the election, the stock market shot up 19.8% over the subsequent three quarters.<\/p>\n

It\u2019s not just Monday-morning-quarterbacking for me to point this out, by the way. Last September, six weeks before the early-November mid-terms, my Barron\u2019s column on this subject carried the headline \u201cWhy the Midterm Elections Could Mark the Market\u2019s Bottom.\u201d The actual bottom occurred last Oct.12.<\/p>\n

Unfortunately, the boost the stock market has received since last October from the resolution of election uncertainty has now played itself out, and is now being replaced by the dampening effect of the uncertainty caused by the 2024 presidential election, which is now just 16 months away. Though this dampening doesn\u2019t guarantee that the stock market will fall, it does mean that this major seasonal tendency is no longer boosting stock prices.<\/p>\n

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at <\/em>mark@hulbertratings.com<\/em><\/p>\n

More: <\/strong>Why this is not a good time to put more money into stocks<\/p>\n

Also read: <\/strong>It\u2019s time to pause on U.S. stocks, say Citigroup strategists. They say invest in these places instead.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

\u201c The boost the stock market has received since last October from the resolution of election uncertainty has now played itself out. \u201d The bull market has lost a major support: The presidential election year cycle no longer calls for significantly higher U.S. stock prices. On June 30, this cycle flipped from supporting better-than-average prices […]<\/p>\n","protected":false},"author":1,"featured_media":34376,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-34375","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nThis critical support for stocks is no longer propping up the market | iFintechWorld<\/title>\n<meta name=\"description\" content=\"\u201c The boost the stock market has received since last October from the resolution of election uncertainty has now played itself out. \u201d The bull market has\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=34375\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"This critical support for stocks is no longer propping up the market | iFintechWorld\" \/>\n<meta property=\"og:description\" content=\"\u201c The boost the stock market has received since last October from the resolution of election uncertainty has now played itself out. \u201d The bull market has\" \/>\n<meta property=\"og:url\" content=\"https:\/\/ifintechworld.com\/?p=34375\" \/>\n<meta property=\"og:site_name\" content=\"iFintechWorld\" \/>\n<meta property=\"article:published_time\" content=\"2023-07-12T00:13:31+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-07-12T00:13:33+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/07\/1689120812_social.jpeg\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"640\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"News Room\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"News Room\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/ifintechworld.com\/?p=34375#article\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=34375\"},\"author\":{\"name\":\"News Room\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\"},\"headline\":\"This critical support for stocks is no longer propping up the market\",\"datePublished\":\"2023-07-12T00:13:31+00:00\",\"dateModified\":\"2023-07-12T00:13:33+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=34375\"},\"wordCount\":601,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"keywords\":[\"Featured\"],\"articleSection\":[\"Investing\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/ifintechworld.com\/?p=34375#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/ifintechworld.com\/?p=34375\",\"url\":\"https:\/\/ifintechworld.com\/?p=34375\",\"name\":\"This critical support for stocks is no longer propping up the market | iFintechWorld\",\"isPartOf\":{\"@id\":\"https:\/\/ifintechworld.com\/#website\"},\"datePublished\":\"2023-07-12T00:13:31+00:00\",\"dateModified\":\"2023-07-12T00:13:33+00:00\",\"description\":\"\u201c The boost the stock market has received since last October from the resolution of election uncertainty has now played itself out. \u201d The bull market has\",\"breadcrumb\":{\"@id\":\"https:\/\/ifintechworld.com\/?p=34375#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/ifintechworld.com\/?p=34375\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/ifintechworld.com\/?p=34375#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/ifintechworld.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"This critical support for stocks is no longer propping up the market\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/ifintechworld.com\/#website\",\"url\":\"https:\/\/ifintechworld.com\/\",\"name\":\"Repay Down\",\"description\":\"Latest Personal Finance News, Tips and Updates\",\"publisher\":{\"@id\":\"https:\/\/ifintechworld.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/ifintechworld.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/ifintechworld.com\/#organization\",\"name\":\"Repay Down\",\"url\":\"https:\/\/ifintechworld.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png\",\"width\":558,\"height\":90,\"caption\":\"Repay Down\"},\"image\":{\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/\"}},{\"@type\":\"Person\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61\",\"name\":\"News Room\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"contentUrl\":\"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png\",\"caption\":\"News Room\"},\"sameAs\":[\"https:\/\/ifintechworld.com\"],\"url\":\"https:\/\/ifintechworld.com\/?author=1\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"This critical support for stocks is no longer propping up the market | iFintechWorld","description":"\u201c The boost the stock market has received since last October from the resolution of election uncertainty has now played itself out. \u201d The bull market has","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/ifintechworld.com\/?p=34375","og_locale":"en_US","og_type":"article","og_title":"This critical support for stocks is no longer propping up the market | iFintechWorld","og_description":"\u201c The boost the stock market has received since last October from the resolution of election uncertainty has now played itself out. \u201d The bull market has","og_url":"https:\/\/ifintechworld.com\/?p=34375","og_site_name":"iFintechWorld","article_published_time":"2023-07-12T00:13:31+00:00","article_modified_time":"2023-07-12T00:13:33+00:00","og_image":[{"width":1280,"height":640,"url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/07\/1689120812_social.jpeg","type":"image\/jpeg"}],"author":"News Room","twitter_card":"summary_large_image","twitter_misc":{"Written by":"News Room","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/ifintechworld.com\/?p=34375#article","isPartOf":{"@id":"https:\/\/ifintechworld.com\/?p=34375"},"author":{"name":"News Room","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61"},"headline":"This critical support for stocks is no longer propping up the market","datePublished":"2023-07-12T00:13:31+00:00","dateModified":"2023-07-12T00:13:33+00:00","mainEntityOfPage":{"@id":"https:\/\/ifintechworld.com\/?p=34375"},"wordCount":601,"commentCount":0,"publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"keywords":["Featured"],"articleSection":["Investing"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/ifintechworld.com\/?p=34375#respond"]}]},{"@type":"WebPage","@id":"https:\/\/ifintechworld.com\/?p=34375","url":"https:\/\/ifintechworld.com\/?p=34375","name":"This critical support for stocks is no longer propping up the market | iFintechWorld","isPartOf":{"@id":"https:\/\/ifintechworld.com\/#website"},"datePublished":"2023-07-12T00:13:31+00:00","dateModified":"2023-07-12T00:13:33+00:00","description":"\u201c The boost the stock market has received since last October from the resolution of election uncertainty has now played itself out. \u201d The bull market has","breadcrumb":{"@id":"https:\/\/ifintechworld.com\/?p=34375#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/ifintechworld.com\/?p=34375"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/ifintechworld.com\/?p=34375#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/ifintechworld.com\/"},{"@type":"ListItem","position":2,"name":"This critical support for stocks is no longer propping up the market"}]},{"@type":"WebSite","@id":"https:\/\/ifintechworld.com\/#website","url":"https:\/\/ifintechworld.com\/","name":"Repay Down","description":"Latest Personal Finance News, Tips and Updates","publisher":{"@id":"https:\/\/ifintechworld.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/ifintechworld.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/ifintechworld.com\/#organization","name":"Repay Down","url":"https:\/\/ifintechworld.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/rep-logo-dark.png","width":558,"height":90,"caption":"Repay Down"},"image":{"@id":"https:\/\/ifintechworld.com\/#\/schema\/logo\/image\/"}},{"@type":"Person","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/6224724fd4116361255b179dc5c70b61","name":"News Room","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/ifintechworld.com\/#\/schema\/person\/image\/","url":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","contentUrl":"https:\/\/ifintechworld.com\/wp-content\/uploads\/2023\/04\/avatar_user_1_1682606986-96x96.png","caption":"News Room"},"sameAs":["https:\/\/ifintechworld.com"],"url":"https:\/\/ifintechworld.com\/?author=1"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/34375","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=34375"}],"version-history":[{"count":1,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/34375\/revisions"}],"predecessor-version":[{"id":34377,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/posts\/34375\/revisions\/34377"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=\/wp\/v2\/media\/34376"}],"wp:attachment":[{"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=34375"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=34375"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ifintechworld.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=34375"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}