History Repeating? The S&P 500’s Post-Election Year Playbook in Action

Ok, the title of this may trigger some people, but you may want to hear me out on this one.

There is so much going on right now, it is hard to pinpoint what the next trigger will be for the market. At the moment the trade tariff narrative is driving markets, but there’s more going on under the surface. We have seen changes in consumer sentiment, GDP forecasts, inflation expectations and many more. 

All I must say is pointing to an economy that is heading for a slowdown rather than growth. 

As this was going on, I thought to myself, let me check the seasonal data. 

This is what I found.

The seasonal chart above is of the S&P 500 average performance in post election years. That’s what we are in right now, we are in a post election year. Which is interesting because look at the performance at the beginning of this year, compared with the price of this year, they are shockingly similar.

I have overlaid the current year's performance on top so we could see that we have pretty much followed the same script as a post election year. Even with all the tariff nonsense going on and all of the poor performing data points, we have still followed the script, which is bearish through February and bottoming in April.

In fact a bottom typically forms in a post election year on April 7th, with a strong rally into May. This historical pattern has a 83% win rate with an average return of 3.99%, which we have absolutely smashed through already. The biggest gain was in 1933, where the price rallied over 41%.

You may think to yourself 1933 sounds significant, and you’re right. In 1933, the market was in the depths of the Great Depression, unemployment was at 25%, and industrial production and GDP plummeted. We’re nowhere near this now, but it was an interesting point to make.

Anyway, will this seasonal pattern ring true this year? 

We are heavily skewed bearish in my opinion. When we think of current sentiment, hedge funds have been selling the S&P 500, consumer sentiment figures are negative with consumers expecting inflation to rise to 5-6%. The trade tariff war between Trump and China seems to have gone a little quiet which is adding to some short term positivity, but how likely is this to remain that way? A bit of coin flip at the moment. 

If the market follows this seasonal pattern until May I think that’s pretty good going. But the market is balancing on the edge. This is why I feel we should look elsewhere when it comes to season plays on stocks. 

At the beginning of the year over on the ‘market wake up’ channel I discussed the trading plan for the year will likely be shorting the VIX (Volatility Index) on large spikes. Well we have certainly seen some of those recently. 

The VIX reached the highs of 60.00 on the 7th April, which was similar to the highs back in 2024. When we see this happen we often see a recovery which can offer traders opportunities to buy the S&P 500 on pullbacks. Now the VIX will likely remain above the 20.00 threshold and will spike again under the Trump administration but that being said, let’s have a look at the seasonals.

Overlaying the current year's performance with the post election year average we can see a similar picture. The VIX tops around the 7th April and can fall until the 14th July with a success rate of 88%. In July we often see a move higher and this is something we should be eyeing up in the future. 

Within this downside we can see multiple spikes higher and this is what I am looking for in order to take advantage of the market. What we do know is that volatility is going to remain high, and this will impact stock markets, some more than others. 

Let me know your thoughts on this one! You can find me on LinkedIn here. Speak to you soon!