Surprised By Nasdaq Strength? You Shouldn’t Be

In just 3 months and 2 days the OTC Composite Index is up over 18% so far in 2019. Given where things stood on Christmas Eve 2018 this has come as a surprise to most investors. But it should not have.

Based on research presented by Jeffrey Hirsch and The Stock Traders Almanac, we know that the OTC Composite Index has showed a historical tendency to exhibit strength from January 1st through the 10th trading day of July during pre-election years.

Figure 1 displays the hypothetical growth of $1,000 invested in the OTC Composite Index only during this roughly 6 and ½ month period of each pre-election year starting in 1975.

Hypothetical $1,000 Invested In OTC Composite Index

Figure 1 – Growth of $1,000 invested in OTC Composite Jan 1st through July Trading Day #10 of Pre-Election year

Hard to beat that for consistency. One thing to note is that during the last 3 previous pre-election years (2007, 2011, 2015) the total results were far less than in previous pre-election years.

Jan 1 through July Trading Day #10 during Election Years

Figure 2 – Jan 1 through July Trading Day #10 during Election Years

*-Jan 1 through July Trading Day #10

**-Jan 1 through April 2, 2019

Is 2019 a “return to form”? Or is there trouble ahead?

As always, time will tell.

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