Chart of The Day - Average Pre-Election Year - Is 2011 Keeping Historical Pace?

Today's chart illustrates how the stock market has performed during the average pre-election year.

Since 1900, the stock market has tended to perform well during the first seven to eight months of the average pre-election year. For the remainder of the year, pre-election performance has tended to be more flat/choppy. In the end, however, the stock market has tended to outperform during the entirety of the pre-election year.

This pre-election year has followed the path of the average pre-election year rather closely with a rally up until mid-February and a correction into mid-March with the aftermath of the devastating Japanese earthquake and tsunami weighing heavily on the market over the past few days.

Chart & Commentary Courtesy of Chart of the Day

Chart of The Day - Average Pre-Election Year - Historical Performance

Today's chart illustrates how the stock market has performed during the average pre-election year. Since 1900, the stock market has tended to outperform during the first 6 to 7 months of the average pre-election year.

For the remainder of the year, pre-election performance has tended to be choppy and slightly subpar. In the end, however, the stock market has tended to outperform during the entirety of the pre-election year.

One theory to support this behavior is that the party in power will make difficult economic decisions in the early years of a presidential cycle and then do everything within its power to stimulate the economy during the latter years in order to increase the odds of re-election.

Chart & Commentary Courtesy of Chart of the Day