2 Calendar Trends Point to 2015 Being a Bull Year for Stocks
11/27/2014 6:00 am EST
Bob Pisani of CNBC.com moves past seasonal November and December trends and highlights an interesting historical stat that jumped out to him regarding results in pre-election years and shares his outlook for where we may be headed as we inch closer towards 2015.
With the midterm elections over, much discussion is now moving toward what 2015 stocks may look like. That's right, we are already moving beyond the seasonally strong November and December issues. Seasonal trends have become a favorite of traders, even though some of them are not working recently.
For this, let me turn to an old friend: the Stock Trader's Almanac, 2015 edition, the venerable yearly production of Jeff and Yale Hirsch. Its chock full of the usual market stats, but since 2015 is a presidential pre-election year, here's one stat that jumped out at me: the DJIA (DIA) has not had a loss in a pre-election year since 1939.
Think about that. Since 1939—no losses in a pre-election year—which is exactly where we are heading in 2015. That's a lot of history.
Here's another stat that was interesting: the worst two quarters of the four-year presidential cycle are the ones we have just left, the second and third quarter of the midterm year. The Dow was up 1.2% in the second quarter compared to the first. It was up 2.2% in the third quarter compared to Q2.
Historically, those are the worst two quarters.
Wait, it gets even weirder. 2015 is the fifth year of the decade, obviously. The fifth year is the best year of the decennial period by a long shot. The Dow (DJI) and its predecessors are up an average of 28.3% in decennial years in the past 130 years. There has only been one losing year ending in ‘5’ in 13 decades.
There are of course economic issues, and for the United States, it's still relative, Goldilocks. Things are good, not great.
By Bob Pisani, On-Air Stocks Editor and Trader Talk Blogger, CNBC.com