8th Year pattern back in play in an undecided election
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Whether looking at "All Presidential Election Years" or just "Eighth Years" in the charts below, the market is usually in rally mode near the end of October. Should the election go as polls suggest then the market will most likely track the "All Presidential Election Years" pattern to finish the balance of 2016. Should the election results be too close to call and trigger a recount in a state or possibly more, then the "Eighth Years" pattern would be back in play. An undecided outcome similar to November 2000 (an Eighth Year) would produce great uncertainty and could lead to declines similar to those that occurred then. DJIA dropped 5.1%, S&P 500 plunged 8.0% while NASDAQ imploded 22.9% (tech bubble burst, not likely to occur again as valuations are not as extreme now) in November 2000. In the undecided scenario, it would not be surprising to see the Fed skip a rate hike in December in order to provide some relief to the market.
This article was written by Jeff Hirsch for Almanac Trader on Oct 18, 2016.
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