This chart illustrates the performance of the S&P500 index after each mid-term elections in the United States.
We can see that since 1950, in the past 17 elections, the S&P has grown in the months that followed in 16 of these occasions. The only exception was after November 2002, when the index suffered -17.62% losses in the months that followed. The rest of the bullish sequences gave on average of +32.84%.
If this time the S&P follows this pattern (+32.84%), then we get a projected target of 3,720. This is of course less realistic as this average takes into account periods (before 1998-2000) that the market was very different and less complex than it is today. It is safer therefore to calculate the average since 2006, a period not too far ago, much more similar to how we know the market today. So the past three post elections gains gave an average +11.47%.
This is good news for long term investors, who can now safely go long on U.S. stocks.
Awesome analysis. I think certainly the markets were wondering if Trumps victory in the elections was a fluke or a real change in US sentiment. We could very well see Trump as a one term president and that will be good for the economy and global outlook. Markets will respond accordingly.
Teklologist
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Dissent. Sell time. Targets match up thus far.
InvestingScope
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@Teklologist, Thank you for your input. All opinions are welcome.