What Politics Can Tell Us About Markets: Ritholtz Chart
Bank of America Merrill Lynch took a look at the presidential-election cycle and found that, on average, the second year is rather weak:
2014 is the second year of the Presidential Cycle. Year 2 on average has a mild rally into April, a pullback into September, and then a strong rally into yearend that carries well into the Presidential Cycle Year 3. If the US equity market follows the Presidential Cycle in 2014, there is a potential selling opportunity in April/May and a potential buying opportunity in September/October. The sweet spot for the Presidential Cycle is from a September mid-term year low through August of Year 3.
If the pattern holds -- and it looks like it will -- the traders among you will have a better buying opportunity later this year.
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(Barry Ritholtz writes about finance, the economy and the business world for Bloomberg View. Follow him on Twitter @Ritholtz.)
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