I saved the best piece of Monthly Analysis for last with a look at the S&P 500. Well, maybe not the best, but certainly one of the most intriguing. There was a lot going on Friday afternoon as the month, and the 3-month period leading up to the next US Presidential Election came to an end. As I mentioned Friday, the closing minutes were volatile as US stock indexes, including the S&P 500 surged late on a round of strong buying. When the dust had settled, this is what we were left with:

  • Technically
    • The S&P 500 closed at 3,269.96, down 137.31 for the month, following through on the major (long-term) bearish key reversal posted during September.
      • This still indicates the major trend is down with a target area between 2,472.17 and 2,127.45.
      • These targets mark the 38.2% and 50% retracement levels of the previous uptrend from 666.79 posted during March 2009 through the September 2020 high of 3,588.11.
        • Again, note the previous major uptrend started with the bullish spike reversal established during March 2009 and reached a high of 2,193.81 prior to the US Presidential Election of 2016.
  • Politically
    • The theory posed by at least one research group states the result of the next US Presidential Election can be foretold by the performance of the S&P 500 during the three months prior to the election.
      • Most recently, July 2008 saw the S&P 500 close at 1267.88 before an October 2008 close of 968.75.
        • The GOP held the White House with George W. Bush, but John McCain lost the 2008 election to Democratic candidate Barack Obama
      • The S&P 500 closed July 2012 at 1,379.92 before climbing to an October 2012 close of 1,416.18
        • President Obama won reelection, defeating Republican candidate Mitt Romney
      • July 2016 finished with the S&P 500 at 2,173.60 followed by an October settlement of 2,126.15
        • Democrat candidate Hillary Clinton won the popular vote by almost 3 million votes (2.0% of everyone voting) but lost the electoral vote to GOP candidate Donald Trump.
      • And finally, July 2020 saw the S&P 500 close at 3,271.12 (dashed blue line) before last Friday’s drama that resulted with a closing tick of 3,269.95, down only 1.15 from July.
        • Based on history (actually going back further than 2008), the next President of the United States will be…