US Stocks May Be Far From Their Peak According to Presidential Cycle Theory
In a historic post-election rally, the $S&P 500 Index (.SPX.US)$ soared to record highs on Wednesday, signaling a robust start to Donald Trump’s second non-consecutive term following the 2024 U.S. Presidential election. This remarkable surge saw the S&P 500 achieve its best post-election day performance ever, with Wall Street's "fear gauge," the VIX, plummeting the most since August. The trading volume on U.S. exchanges exceeded expectations, with nearly 19 billion shares traded, marking a 63% increase over the daily average of the past three months.
Furthermore, the Dow Jones Transportation Average broke its three-year record drought, aligning its highs with its Industrial counterpart— a bullish indicator according to followers of the Dow Theory. This synchronization suggests potentially better times ahead for the broader market.
Based on the Presidential Election Cycle Theory, analysts suggest that despite these immediate post-election gains, U.S. stocks might still be far from reaching their peak. Originally documented by Yale Hirsch in 1967, this theory observes that U.S. stock market returns tend to follow a specific pattern with each new presidential term.
From 1950 to 2023, the historical data shows that the stock market often performed well in the first year of a presidential term, outperformed only by the third year. In the first year of a presidential cycle, presidents typically concentrate on fulfilling key campaign promises, often catering to the interests of their supporters. By the third year, the focus generally shifts toward stimulating the economy to bolster re-election efforts or strengthen their party's standing for the next election.
The 9 Dates That Matter After Election Day
As the U.S. transitions into a new presidency, several critical dates loom that could influence market dynamics:
November 7: States begin certifying election results. The key battleground state of Georgia must certify its results by Nov. 23, followed by Michigan on Nov. 25 and North Carolina and Nevada on Nov. 26. Wisconsin’s deadline for certifying electoral college results is Dec. 1, and Arizona is Dec. 2. Pennsylvania and Rhode Island don’t have specified deadlines for certification.
November 11: If no clear winner has emerged, presidential transition briefings are mandated to begin, ensuring both campaigns are well-informed.
November 26: As the formal processes that confirm the election results continue, there is a real possibility that Donald Trump may need to appear in a Lower Manhattan courtroom for sentencing in his New York hush-money case.
December 11: Governors sign certificates of ascertainment, formally allocating electoral votes.
December 17: Electors cast their votes, a crucial step in confirming the election's outcome.
December 25: Deadline for electoral votes to arrive in Washington, D.C.
January 3, 2025: The newly elected Congress convenes, potentially requesting missing electoral certificates.
January 6, 2025: Electoral votes are counted in a joint session of Congress, overseen by the Vice President.
January 20, 2025: Inauguration Day, marking the official start of the new presidential term.
Source: Carson Investment Research, WT Wealth Management, Time
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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104556909 : good
ztock_boy : one paragraph of useful info. rest is political jargon. what asset classes are affected? what is market sector transition?
Treasury Debt Gets 'Punched in Face' After Trump Win. What to Do With Bonds Now
Laine Ford : this year is almost gone out no money tha Elaine have to show that why I am going offline for a while always log in but I will not say online like I used to
Laine Ford : good stock
Adrianlim90 : 1