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January Has Most Midterm Year Lows

Down January got you down? You might find some solace from the
table on page 34 in the 2022
Stock Trader’s Almanac
on “Why A 50% Gain in the Dow Is Possible from
Its 2022 Low to Its 2023 High.” In the table on that page which I have
reproduced for you above you will note that of the 27 midterm lows since 1914
the month with the most midterm year lows is January with six.

Midterm election years are notoriously volatile as the two
political parties battle it out with the opposing party hammering the incumbent
president publically, politically and legislatively to control Congress. And
this is particularly pronounced for first term presidents like Joe Biden. We
have added 2022 year-to-date performance to our chart here of the “S&P 500
Midterm Election Year Seasonal Pattern” and it’s not pretty.

That’s not to say we believe the low for the year is in as
the midterm low as you can see in the chart below usually comes during the weak
spot of the 4-Year Cycle during Q2 or Q3. But since the market has already
exceeded the average midterm low this year, there is a decent chance we are in
the process of making an early midterm year low.

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