Pre-Election Year Cycle

We took a look back in January at some Chart of the Day data regarding the year just prior to our presidential elections and how markets have traded during that time.  See this post here.  Today these folks have taken another look at the same data, comparing how we've traded so far in 2011 with their market averages.  Note the drop off with the exogenous events out of Japan and most likely Libya.

"Today's chart illustrates how the stock market has performed during the average pre-election year. Since 1900, the stock market has tended to perform well during the first seven to eight months of the average pre-election year. For the remainder of the year, pre-election performance has tended to be more flat/choppy. This pre-election year has followed the path of the average pre-election year rather closely with a rally up until mid-February and a correction into mid-March with the aftermath of the devastating Japanese earthquake and tsunami weighing heavily on the market over the past few days."

My thoughts:  I don't know if those returns percentages shown in the chart are accurate but if they are then it implys that on average stocks have returned something like 15% in that pre-election year.  A 15% return on par with what is shown on the chart above whould imply about 1,450 on the S&P 500 by year end.  That would equate to about a 13% return from where we trade right now.  I'll stick to my 1,350-1,400 numbers by year's end right now.  That is still price appreciation potential from where we stand right now of between 6-10%. 

Link:  http://www.chartoftheday.com/20110318.htm?T

*Long ETFs related to the S&P 500 in client and personal accounts.