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The initial stock market reaction to the election outcome has been positive. Is this just a knee-jerk reaction or a sign of better things to come?

I don’t pretend to know, but can offer the approach that has the best possible answer: How the S&P 500 has reacted to past election results.

First off, below is a list of past US Presidents since the end of WW2.

Shown next is the S&P 500 following every Presidential Election Day since 1972. Can you discern a theme?

It’s actually not obvious from that chart, but a clear bias develops when slicing the data and examining S&P 500 performance after:

A Republican (R) President Elect compared to a Democratic (D) President Elect and

When R President Elect follows incumbent D President compared to a D President Elect following incumbent D President (as would have been the case in a Harris victory).

Yes, there is a clear performance bias, but there is also a huge caveat.

The Special Election Report (sent out to subscribers on record on Monday) reveals the bias along with the massive caveat.

Sign up for the Profit Radar Report here to get instant access to this Special Report.

Bull Market Longevity

With election uncertainty out of the way we can move on to our ‘regular scheduled program,’ such as bull market longevity. This bull market turned 2 years old last month.

At 2 years of age, how much life is left in this bull market?

The green portion of the graph below highlights every bull market since 1957. There is no standard definition for bull market, but I used the commonly accepted definition of a 20% rally following a 20% decline (see table insert for exact dates).

The graphs below reflect the length and trajectory of all bull markets since 1957 in a different format. 9 of the previous 12 bull markets lasted longer than 2 years or 504 trading days (one year equals about 252 trading days).

The 1966-68 bull market ended after 516 trading days, the 1970-73 bull market after 666 trading days. The remaining 7 lasted longer than 900 trading days.

Interestingly, 14,399 of the 17,054 trading days (or 84.43%) since 1957 were spent in bull market environment.In short, in terms of longevity, there’s plenty of potential life left in this bull. 

The S&P 500 gapped above a cluster of resistance levels on Tuesday. This confirms my outlook from the October 20, 2024 Profit Radar Report:

“A number of September PRRs mentioned the potential for a FOMO (fear of missing out) rally. The S&P 500 has not yet confirmed or squashed the potential for a FOMO rally, but the path of least resistance continues to be up as long as above support (5,760 and 5,670).

I would not be surprised to see a drawn out grind higher that will keep going until a sudden - seemingly out of nowhere - drop erases weeks of gains within days.

Obviously that’s an unthankful environment to be in because the grind higher is painful when not invested and the (supposed) eventual drop is painful when not exited in time.

But first steps first. If and once the S&P closes above resistance, we will consider additional long exposure.”

The monthly S&P 500 log scale chart shows some upcoming chart resistance that may well turn out to be a thorn in the bulls paw and cause the market to hobble for a while before resuming.

If you want to become the best-informed investor you know and base your decision only on objective and relevant analysis, check out the Profit Radar Report.

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