Can you combine politics with seasonality? With the Presidential election coming up, here's a review of some trading strategies for the stock market built around this event."The quadrennial Presidential election-year cycle has a profound influence on the stock market. Stocks tend to advance most strongly during the year immediately preceding and the year of the election, but only tread water during the other two years of the four-year cycle. How, then, might a trader incorporate this phenomenon into a trading system and combine politics with seasonality?"
"What is clear is that the preelection and election years vastly outperform the other two years. The preelection year returns are more than double the average 0.74% monthly S&P 500 return. Election years are also superior, but less so, with an average return of 0.84%. What is noteworthy is that the market closed higher roughly two-thirds of the time in preelection or election years, but was worse than a coin flip in postelection years."
