Investing.com – Amid heightened market volatility, investor newsletter Stock Trader’s Almanac warns that the recent decline may not be over yet. When compared to previous election years, the market is exhibiting familiar patterns, particularly those seen in 1968.
Historically, the S&P 500’s losses in election years have averaged 13.4 percent since 1952. On August 5, the S&P 500’s decline was 8.5 percent, which is within normal range but still below average.
The NASDAQ, on the other hand, recorded a decline of 13.1 percent, also below its election-year average of 21.2 percent.
The note had previously pointed to support levels for the S&P 500 at 5190 and the NASDAQ at 16500. These levels have been broken, suggesting that further declines could test the April lows of 4954 for the S&P 500 and 15223 for the NASDAQ, which would represent corrections of 12.6% and 18.4%, respectively.
The market’s performance and recent sell-off reflect historical patterns, particularly the 1968 election year, which was marked by political and geopolitical turmoil. Although the comparison to 1987 has been considered, the current market is less pronounced. The S&P 500 is up 18.8% at its peak this year, compared to over 35% at this point in 1987.
August through October are traditionally weak market periods, and strategists believe the recent move is consistent with seasonal weakness. While this pullback seems overdue, it is likely not complete yet, as further trouble may arise in the run-up to the election.
But history also offers a silver lining: since 1952, only two defeats have occurred in the last seven months of an election year. This suggests that, despite ongoing volatility, the year could still end on a positive note.
