User: domg: my stack: August, Best Month in Election Year $QQQ $IWM - Stock Trader's Almanac Blog
August, Best Month in Election Year $QQQ $IWM - Stock Trader's Alm...
Yale & Jeff Hirsch
About the EditorJeff is editor in chief of the Almanac Investor newsletter Stock Trader's Almanac, StockTradersAlmanac.com, and the Hirsch Organization. He makes frequent appearances on CNBC, CC, Fox, and Bloomberg. Yale Hirsch is founder of the Stock Trader’s Almanac.
Beware the Summer Rally Hype, Historically the Weakest Rally of All Seasons (Stock Trader'a Almanac Page 70)
Dow: 38.1% S&P: 38.1% NAS: 52.4% R1K: 42.9% R2K: 57.1%
"You win some, you lose some. And then there's that little-known third category."—Albert Gore (U.S. Vice President 1993-2000, former 2000 presidential candidate, quoted at the 2004 DNC)
August, Best Month in Election Year $QQQ $IWMBy Christopher Mistal & Jeffrey A. Hirsch
Money flows from harvesting made August a great stock market month in the first half of the 20th Century. It was the best month from 1901 to 1951. In 1900, 37.5% of the population was farming. Now less than 2% farm and August is one of the worst months of the year. August is the worst DJIA, S&P 500, NASDAQ and Russell 2000 month since 1987 with average declines ranging from 0.5% for NASDAQ to 1.2% for DJIA.
Contributing to this poor performance since 1987; the shortest bear market in history (45 days) caused by turmoil in Russia, the Asian currency crisis and the Long-Term Capital Management hedge fund debacle ending August 31, 1998 with the DJIA shedding 6.4% that day. The Dow dropped a record 1344.22 points for the month, off 15.1%—which is the second worst monthly percentage Dow loss since 1950. Saddam Hussein triggered a 10.0% slide in August 1990. The best Dow gains occurred in 1982 (11.5%) and 1984 (9.8%) as bear markets ended. Sizeable back-to-back declines in 2010 and 2011 have widened Augusts’ average losses.
In presidential-election years since 1952, Augusts’ rankings improve significantly to: #4 DJIA and S&P 500 and #1 NASDAQ (since 1972) and Russell 2000 (since 1980). However this year, the ongoing European debt crisis and signs of a slowing growth could hinder the typical election year “boost”.
Not a subscriber? Sign up today for a Free 7-Day Trial to Almanac Investor to get a full run down of seasonal tendencies that occur throughout each month of the year in an easy-to-read calendar graphic with important economic release dates highlighted, Daily Market Probability Index bullish and bearish days, market trends around options expiration and holidays. In addition, the Monthly Vital Statistics Table combines stats for the Dow, S&P 500, NASDAQ, Russell 1000 and Russell 2000 and puts them all in a single location available at the click of a mouse.
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