This chart is courtesy of EquityClock.com
There are two line charts. A blue line and a magenta line. As in the legend the blue line represents the composite of Mid-Term Election Years and the magenta line represents a composite of many years. The Timeframe: 81 year range ending 12/31/2009.
As suggested by this chart we are in the seasonally favorable period.
Per EquityClock.com
The Markets
Stocks traded flat on Friday as the momentum following the
significant gains recorded since mid-October shows signs of waning.
The S&P 500 Index recorded a gain of a mere 0.02%, however, the
fourth straight week of gains was logged, adding another 0.39% to chart
further all-time highs. Gains during the week ahead my be difficult to
achieve as November options expiration drags on broad equity
benchmarks. Over the past 60 years, the S&P 500 Index has averaged
a loss of 0.03% during options expiration week. Losses were realized
in approximately half of the periods. This year’s November option
expiration occurs much later than usual on the 21st; similar instances
of November 21st expiration dates have been particularly negative for
stocks. The S&P 500 Index has recorded a decline of 1.16% during
this late expiration week with negative results recorded in 63% of
periods. The last instance was in 2008 when a November option week
decline of 8.39% had a significant impact on the statistics for this
downbeat timeframe. The good news is that the losses are typically
reversed in the week that follows. The S&P 500 Index averaged a
gain of 0.49% post expiration week with positive results realized in
nearly two-thirds of the periods. Post expiration week generally
encompasses US Thanksgiving, providing further buoyancy to equity
benchmarks during what is a holiday shortened period.
| S&P 500 Index returns surrounding November Options Expiration |
| Year |
Options Expiration Week Return |
Post Expiration Week Return |
| 2013 |
1.56% |
0.37% |
| 2012 |
-1.45% |
3.62% |
| 2011 |
-3.81% |
-4.69% |
| 2010 |
0.04% |
-0.86% |
| 2009 |
-0.19% |
0.01% |
| 2008 |
-8.39% |
12.03% |
| 2007 |
0.35% |
-1.24% |
| 2006 |
1.47% |
-0.02% |
| 2005 |
1.10% |
1.60% |
| 2004 |
-1.17% |
1.05% |
| 2003 |
-1.43% |
2.21% |
| 2002 |
1.69% |
2.28% |
| 2001 |
1.64% |
1.03% |
| 2000 |
0.13% |
-1.90% |
| 1999 |
1.86% |
-0.38% |
| 1998 |
3.36% |
2.47% |
| 1997 |
3.74% |
-0.80% |
| 1996 |
0.93% |
1.51% |
| 1995 |
1.24% |
-0.02% |
| 1994 |
-0.19% |
-1.99% |
| 1993 |
-0.60% |
0.10% |
| 1992 |
1.00% |
0.82% |
| 1991 |
-2.61% |
-1.69% |
| 1990 |
1.08% |
-0.64% |
| 1989 |
0.74% |
0.69% |
| 1988 |
-0.54% |
0.29% |
| 1987 |
-1.48% |
-0.69% |
| 1986 |
0.56% |
1.37% |
| 1985 |
2.27% |
1.72% |
| 1984 |
-2.09% |
1.72% |
| 1983 |
-0.72% |
1.27% |
| 1982 |
-1.80% |
-1.56% |
| 1981 |
0.03% |
2.78% |
| 1980 |
1.43% |
1.01% |
| 1979 |
2.25% |
0.85% |
| 1978 |
-0.37% |
1.45% |
| 1977 |
-0.68% |
1.43% |
| 1976 |
2.70% |
1.21% |
| 1975 |
-1.58% |
1.91% |
| 1974 |
-4.00% |
-4.19% |
| 1973 |
-1.35% |
-4.27% |
| 1972 |
1.55% |
1.54% |
| 1971 |
-0.55% |
0.36% |
| 1970 |
0.42% |
2.64% |
| 1969 |
-2.83% |
-0.54% |
| 1968 |
1.76% |
0.49% |
| 1967 |
0.66% |
1.16% |
| 1966 |
-0.83% |
-0.50% |
| 1965 |
-0.33% |
-0.23% |
| 1964 |
1.26% |
-1.30% |
| 1963 |
-1.38% |
-3.79% |
| 1962 |
2.35% |
2.29% |
| 1961 |
0.77% |
0.31% |
| 1960 |
-0.09% |
0.56% |
| 1959 |
0.21% |
1.28% |
| 1958 |
-0.73% |
-0.42% |
| 1957 |
0.45% |
1.24% |
| 1956 |
-1.29% |
-1.31% |
| 1955 |
0.66% |
0.31% |
| 1954 |
-0.27% |
3.29% |
| Average: |
-0.03% |
0.49% |
| Frequency of Gains: |
32 |
38 |
Now let's compare 2014, a Mid-Term Election year ending in a "4", to other such years in this chart above.
Year Options Expiration Week Return Post Expiration Week Return
1954 -0.27% 3.29%
1974 -4.00% -4.19%
1994 -0.19% -1.99%
2014 ? ?
Average: -1.49% -0.96%
Frequency of Gains: 0 out of 3 1 out of 3
When looking at similar years as 2014, the statistics look different than in the large data chart above including all years from 1954 to 2013.
Now let's look at all years ending in a "4" (the decennial pattern)
Year Options Expiration Week Return Post Expiration Week Return
1954 -0.27% 3.29%
1964 1.26% -1.30%
1974 -4.00% -4.19%
1984 -2.09% 1.72%
1994 -0.19% -1.99%
2004 -1.17% 1.05%2014
Average: -1.08% -0.24%
Frequency of Gains: 1 out of 6 3 out of 6
Lets compare the analysis summaries from above
Options Expiration Week Return Post Expiration Week Return
1st Data Chart:
Average -0.03% 0.49
# of Gains 32 out of 60=53% 38 out of 60=63%
2nd Data Chart:
Average -1.49% -0.96%
# of Gains 0 out of 3=0% 1 out of 3=33%
3rd Data Chart:
Average -1.08% -0.24%
# of Gains 1 out of 6=17% 3 out of 6=50%
Observation: When you filter the years 1954 to 2013 you make a better comparison to 2014 and the results change.
The top blue and magenta line chart took into consideration the Mid-Term Election Years. The 60 years of data should have made a similar comparison.
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This
has been posted for Educational Purposes Only. Do your own work and
consult with Professionals before making any investment decisions.
Past performance is not indicative of future results
