The Most Bullish Stretch of the Presidential Election Cycle Is Underway

September 29, 2010 (SPY @ 114.15 @ 10:46 a.m. EST):  If history is any guide (and it is the only one that we have), we are currently about to enter the most bullish stretch of the four year presidential election cycle.  As the accompanying table shows, midterm Octobers (10 in the month row in the "Mid" column) have an average 3.08% gain. Although as I write this, September has been up sharply, so it is possible that October may see a natural selloff or less than average gain.   Nevertheless, the next 11 months - through September of the pre-election year - have all been up sharply on average with the exception of pre-election Mays (0.15% average).  Selloffs in September and October of the pre-election year (2011) have given each of those months a negative average return (the crash of '87 occurred in October of the pre-election year, which, like all pre-election years since World War II, ended the year up - the sell-off simply wiped out most of the gains of the year).

	Month x Election Year Live Tables:
Month:	Post	Mid	Pre	Ele
1	0.31%	-0.50%	4.24%	0.13%
2	-1.71%	1.16%	0.88%	-0.48%
3	0.39%	0.48%	1.82%	0.73%
4	1.52%	0.51%	3.24%	1.21%
5	1.69%	-0.95%	0.15%	0.46%
6	-0.75%	-2.04%	1.84%	1.37%
7	1.91%	0.24%	1.19%	-0.06%
8	-1.02%	-0.50%	1.20%	0.70%
9	-0.27%	-1.89%	-0.49%	-0.39%
10	1.03%	3.08%	-0.94%	-0.40%
11	1.74%	2.65%	0.36%	1.02%
12	0.61%	1.72%	2.95%	1.08%