Tags: Election | Hickey | stocks | decline

Bespoke’s Hickey: Election-Year Charts Signal Stock Slide After Labor Day

Tuesday, 28 Aug 2012 12:56 PM

By Dan Weil


If chart patterns from election years hold true to form this year, stocks are in for a decline between Labor Day and Columbus Day, says Paul Hickey, co-founder of Bespoke Investment Group.

"You don't take this stuff as gospel, but you look for patterns, and you can use them as a guide for the market," he tells Yahoo.

"This year the market has been following its typical election year pattern, with the peaks and troughs, almost to a T.”

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

And what is that pattern? “You see a rally through the end of the summer, and then from Labor Day to Columbus Day you tend to see a pullback in the market," Hickey says.

Indeed Bespoke research shows that in election years going back to 1928, the Standard & Poor’s 500 Index has suffered an average drop of 1.95 percent between Labor Day and Columbus Day.

That compares with a 0.63 percent average decline during that period for all the years.

"You can foresee this pattern holding up …,” as election-year uncertainty heats up and Europe’s debt crisis returns to the fore, Hickey adds.

For the very short-term, experts say Federal Reserve Chairman Ben Bernanke’s speech Friday might determine the market’s direction.

“It will be interesting to see what Bernanke says about the economy,” Liz Ann Sonders, chief investment strategist at Charles Schwab, tells Bloomberg. “I wouldn’t expect to hear much about easing other than we’re going to keep the door open.”

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

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