A bullish election

In last week’s midRepublican Elephant and Democrat Donkey-term elections Republicans gained control of the Senate and come January, when newly elected Senators take the oath of office, Republican lawmakers will hold the majority of seats in both the House and Senate.  Hard to believe, but according to BTN Research this will be only the seventh year in the past five decades when Republicans had control of Congress with a Democratic President. The average S&P 500 gain in those earlier six years: +21.3%.

♦ Please note that my readings will change without notice,  so please don’t buy or sell solely based on anything you read in this blog. ♦

 

Smooth ride, but for how much longer?

Longest Periods for S&P 500 Without a 10% CorrectionThe S&P 500 has now gone 1,128 calendar days (October 3, 2011 – November 5, 2014) without a 10% or greater drop in the index, the fourth longest stretch without a double-digit pullback in nearly 70 years. The S&P 500’s correction-free run overtakes the 1,127 day streak within the 1984-87 bull market. If current market strength persists, the next S&P 500 record (1962-66) will fall  on January 22, 2015.

♦ Please note that my readings will change without notice,  so please don’t buy or sell solely based on anything you read in this blog. ♦

Giants’ win bullish for Wall Street?

There’s no shortage of statistical analysis on Wall Street and while some of the research sheds light on patterns worth paying attention to, that’s not always the case.  In the early 1990s, for example, a professor at the University of California-Berkeley School of Business noted an amazing 99% correlation between the performance of the S&P 500 over a 10-year period and the combination of cheese production in the US, butter production in Bangladesh, and sheep population in Bangladesh. The cheese-butter-sheep/S&P 500 relationship went bust in 1994.

A predictor with a bit more staying power is a National League win in the World Series. Last night the National League’s San Francisco Giants clinched the pennant with a 3-2 win over the American League’s Kansas City Royals. Historically, the S&P 500 has risen 90% of the time in QTR 4 when that happens. And since 1950, the calendar year following National League wins have been bullish for the Dow Industrial Average 83.9% of the time. A few years ago Capital IQ determined that the number of games required to wrap up the World Series is correlated with the S&P 500’s return the following year with fewer games yielding better performances. This year, the Giants-Royals battled to a seventh and final game.

Boston Red SoxIt’s miserable being an investment adviser and a Boston Red Sox fan. True, the Red Sox have won eight titles in World Series history, but the first Boston title of my life time didn’t occur until I was in my 40s! When they do win, it usually doesn’t bode well for the stock market. Wall Street has been bearish in years following a Red Sox triumph a staggering 62.5% of the time. Even worse, the Sox hold the record for the biggest S&P 500 decline after a World Series victory: -38.9% in 2008. (The Boston Red Sox play in the American League.)

♦ Please note that my readings will change without notice,  so please don’t buy or sell solely based on anything you read in this blo