THE TRUMP RALLY HITS SEASONAL HEADWINDS
Many of our astute readers will recall that one of our favorite seasonal indicators revolves around political election cycles. Given the inauguration has passed, we thought it would be in our readers' interest to review the average historical performance of the S&P 500 Index prior to and after a republican inauguration day.
We called on the Klocke Capital computers to generate the chart below which highlights the movement of the S&P 500 Index 60 days prior to and 60 days after a republican inauguration. We plotted the S&P 500 Index's current performance (red line) versus the average performance of the index (blue line) during past republican inauguration days.
As the chart below highlights, the index typically exhibits weakness in the days following a republican inauguration.
The Y axis (vertical) represents the average performance growth of $1 invested in the S&P 500 Index 60 days prior to and 60 days after republican inauguration day. The X axis (horizontal) axis represents days. Price history since 1950. Data source: Yahoo Finance.
We interpret the data presented in the chart above as corresponding with our near-term bearish outlook. In light of our view, we suggest selling out of the money calls against existing positions and employing a put writing strategy for new purchases.
We continue to endorse our low volatility portfolios as the best method to manage your investment portfolio. For more information regarding our investment process, please visit our website at: www.klockecapital.com
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or contact us at 877-991-7161
Matt Klocke, CMT
Klocke Capital Group, LLC
Toll Free: 877-991-7161
Past performance does not guarantee future results. There is no assurance these trends will continue. The market value of securities fluctuates and you may incur a profit or loss. This analysis does not include transaction costs and tax considerations. If included, these costs would reduce an investor’s return.
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