Updated Stock Market Indicator: S&P 500 "predicting" Bush Loss

[swag]

I posted a similar pic yesterday that was mislabled as "Dow Jones Industrial Average." The underlying data was really the S&P 500, not the Dow. I got the data and updated it through yesterday's close. If one takes this indicator seriously, it looks like the market is still "predicting" a Bush loss this year.

[LoZoccolo]

1. How did you arrive at the red & blue lines? n/t

[swag]

3. I only have the averages in this guy's spreadsheet, I'm afraid

I'll try to get the date range for you. The source is not in his office today.

Knowing this guy, though, I'd say those are averaged post World War II election year returns.

Not a huge dataset, mind you.

on edit: the dataset is elections since 1900.

[swag]

5. The red and blue lines are average returns of the S&P 500

for election years since 1900. The blue line is averaged S&P 500 returns during years in which the incumbent party won.

The red line is averaged S&P 500 returns during years in which the incumbent party lost.

The green line is 2004 S&P 500 returns to date.

[mac56]

2. If this means what I think it means, it's great news.

But can you explain it more clearly for those of us who aren't savvy? To me it looks like the blue line ("incumbent party wins") is higher than the red. Thanks.

[swag]

4. The blue line is higher than the red, but the

behavior of the stock market this year (the green line) most closely matches the red. So the people who tout this as an indicator of sorts(Siegel, et al.) would say that since this year's returns are very close to the average returns during incumbent-loss years, the market may be "predicting" that the incumbent will lose this year.

Clear as mud? Thought so.

If the stock market had been great this year, rather than flat (close to 0% return), then it would be said that the market is "predicting" a Bush win. But that is not the case.

[mac56]

8. got it

Thanks. Clearly, a lot of work went into that.

[swag]

9. You're very welcome.

The work's no problem. Some of us just luuuuvvv our spreadsheets.

[wishlist]

6. Pundits have been saying 10,400 for Dow is make or break for Bushco

With the market retreating again to around 10,000 and high oil prices and other negative economic news, it seems unlikely that the stock market will rebound enough to show a net gain for the year by the election. So far all of the spinning of the economic numbers and the market cheerleading is not propping up the Dow to a desirable level that can help Bushco.

[Catfight]

7. Bush equates to a Bear Market, Kerry is a BULL! It's that simple. n/t

[maxsolomon]

10. could you correct for years when FASCISTS were in power?

oil is over $50 a barrel, gas is up over $2 in seattle, heating season is due any minute, and tra-la-la, no one seems to care.

stupidly making a rash, wrong decision & sticking with it seems to be the gold standard.

nader voters COME HOME!

[swag]

11. Oh you're right. I also forgot to factor in the Asshole premium.

Sorry.

Maybe in the next iteration of the model.