Scenarios: An update.

Back at the end of the month we published a series of four scenarios on what we thought could happen to stocks through the rest of this year.  So far stock prices are trading somewhere between our scenarios one and three.  

In scenario one we said, "Markets make marginal new highs between now and early summer. The summer doldrums set in, a slight slowdown in economic growth occurs and issues in Europe preclude stocks going much higher than the 1420-1430 range on the S&P 500. After a brief period of chop, stocks decline 6-10%. A rally is capped until markets sort out among themselves who will be the winners in November. At that point markets resume their rally and end the year somewhere between 1450-1500. This scenario gives President Obama 50% odds of being re-elected."

Our 3rd scenario envisioned a scenario where "Slower than expected economic growth, persistently high unemployment statistics, fears of a 2013 recession and continued problems in the Euro zone contrive to put a lid on stock prices in May and June leading to a summer decline as the election season approaches. Markets rebound after the elections and finish 2012 between 1350 and 1425, not far from their April highs. This scenario places the President's odds of being re-elected at under 50%." 

There is another possibility however.  That's the possibility that stocks continue to mimic the trading patterns of the past two years.  If that is the case then the markets could look a lot like the chart pattern we're showing below.

Stay tuned.

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