Market Top? Part II
Since at least 1940, each time an election year November has failed to surpass the price of the preceding election year November, that November has marked within two months of an important market top.
We should note that November 2004 closed well below November 2000 on the S&P 500 and at almost exactly the same level on the Dow Jones Industrial Average. If the history of the past 60 years is a guideline, it should mark November 2004 as being within two months of an important market top. That market top was formed at the beginning of January 2005. There appears to be a possible clue as to whether this pattern will continue. The February following election year Novembers has been an excellent indicator as to whether the election year November would mark an important top.
In every case since at least 1968, following the election year November, when the post election year February moves to a higher high than the post election year January, the market has proceeded to do very well. Conversely, when the post-election year February is unable to move higher than the post-election year January, a significant market decline has always followed. This may be coincidence but it has proved prescient for at least the past 40 years.
For what it is worth, the Dow Jones Industrial Average DJIA and S&P500 have just eclipsed their January 05 and December 04 highs. However, they are a week late and did not do this in February.
Therefore, next weeks market action will be critical in determining whether: the market still has fuel in the tank and can remain at these levels to eventually head up further, or will the rally fizzle and form a double top, in which case, the above observations may hold true yet another election year.
See: Stockmarket Cycles - December 2004 Observations
http://www.stockmarketcycles.com/current_observations.htm
We should note that November 2004 closed well below November 2000 on the S&P 500 and at almost exactly the same level on the Dow Jones Industrial Average. If the history of the past 60 years is a guideline, it should mark November 2004 as being within two months of an important market top. That market top was formed at the beginning of January 2005. There appears to be a possible clue as to whether this pattern will continue. The February following election year Novembers has been an excellent indicator as to whether the election year November would mark an important top.
In every case since at least 1968, following the election year November, when the post election year February moves to a higher high than the post election year January, the market has proceeded to do very well. Conversely, when the post-election year February is unable to move higher than the post-election year January, a significant market decline has always followed. This may be coincidence but it has proved prescient for at least the past 40 years.
For what it is worth, the Dow Jones Industrial Average DJIA and S&P500 have just eclipsed their January 05 and December 04 highs. However, they are a week late and did not do this in February.
Therefore, next weeks market action will be critical in determining whether: the market still has fuel in the tank and can remain at these levels to eventually head up further, or will the rally fizzle and form a double top, in which case, the above observations may hold true yet another election year.
See: Stockmarket Cycles - December 2004 Observations
http://www.stockmarketcycles.com/current_observations.htm
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