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SPX Presidential Cycle Election Year And Congressional Cycle Election Year GuideChart Illustrating The "Sell In May And Go Away!" Wall Street Phenomena And The Subsequent Stock Market Composite Price Level Drop.

May 01, 2012 12:08 AM ETSPY, DIA
Kevin Wilbur profile picture
Kevin Wilbur's Blog
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Provided below is a graphical display of the professionally favored and broadly watch Large Cap Stock Market Index, the $SPX.

The SPX is the favored index, and "general stock market measure" used by professional analyst and investment managers both domestically and globally. It is held as the predominate and most representative measure of the US Large Cap Securities Market.

Presented below is a GuideChart of the SPX which illustrates the effects of the (1) Presidential Election Cycle and the (2) Congressional Election Cycle on the price level of the SPX.

In this illustration, I am focusing particularly on the effect of the old Wall Street adage "Sell in May and Go Away", and how this adage is (1) illustratively pronounced in Presidential Election Cycle years and Congressional Cycle Years, and (2) how it can lead to the start of, and cascade into a precipitous and major Stock Market selloff's in Regime Change Cycle Election years (which are usually every eight years, but can occur, post facto, in four years as well.)

Also illustrated is how immediately preceding annual echovector cycles can also foreshadow the May selloff (see the May 2011 and May 2010 echovectors highlighted in beige)


1. Click on the Chart and then Click again to both enlarge and zoom the chart. Use your optimum display settings also.

2. The SPX GuideChart is a 10-Year Weekly OHLC (Open/High/Low/Close) Price Bar chart

3. The Congressional Election Cycle is displayed in alternate yellow and agua-blue vectors, in order to discern every two years along the chart from the key First Trading Week of May bar and its high price more clearly.

4. The selloff from the first week of May to the traditional 2ND or 3RD Week of August is displayed with a red vector. The white bars located under Congressional Cycle or located on the weekly OHLC (Open/High/Low/Close) price bar line also display these annual sell-off sums.

5. In solid green are the correlate dates of the weekly bars beginning the selloff the first trading week in May for the cycle years.

6. In solid red are the correlate dates of the weekly bars completing the selloff sum at that time. Notice that in many cycle years 'lower lows' are achieved before this date.

7. The horizontal solid pink line illustrates how the SPX has achieved the nearly perfect correlate price level to May four years earlier, on aweekly closing price basis. This is often referred to as a resistance price level vector (with respect to the expressed specific time quantity (in this case, being four years).

8. The eight-year long dotted-green lines represent key price vectors and ascending price channels identified by EchoVectorVEST MDPP.

9. Notice the magnitude of the selloff from (1) the first week in May of Regime Change Cycle Election year, or, (2) as measured from its preceding year's summer price high.

We hope this chart helps demonstrate the prudence of applying price level insurance to major market funds and ETFS. These funds and ETFs typically comprise a large portion of overall portfolio exposure existing under passive professional management regiments and affiliations.

The historical reward-to-risk ratio of proceeding beyond THE FIRST WEEK OF MAY without 'major stock market exposed' portfolio price level 'insurance' applications, or proceeding to just continue along within 'full uninsured passive portfolio management portfolio exposures', would seem imprudent and potentially counter-productive to overall accrued, and time-already-spent-earned, portfolio value.

In the present era of active and advance financial management and financial position and holdings value optimization techniques, better price protection strategies and portfolio management and portfolio value enhancement opportunities are available.


SPX 10-Year Weekly OHLC GuideChart

Disclosure: I am short SPY.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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