The S&P 500’s Correction Is Not Over: Strategies By Investing.com

Investing.com — Amid increased market volatility, investor newsletter Stock Trader’s Almanac warns that the recent pullback may not be over. With comparisons to previous election years, the market is experiencing familiar patterns, especially those seen in 1968.

Historically, election-year declines for the S&P 500 have averaged 13.4% since 1952. Since August 5, the S&P 500 is down 8.5%, which is within the typical range but still below average.

The NASDAQ, on the other hand, was down 13.1%, still below its election year average of 21.2%.

The note had previously signaled support levels for the S&P 500 at 5190 and the NASDAQ at 16500. These levels were breached, suggesting further declines could test the April lows of 4954 for the S&P 500 and 15223 for the NASDAQ, corresponding to 12.6% corrections. respectively 18.4%.

The market’s trajectory and recent sell-offs reflect historical patterns, particularly the 1968 election year marked by political and geopolitical turmoil. Although the comparison to 1987 is taken into account, today’s market is less bullish, with the S&P 500 up 18.8% at its peak this year, compared to more than 35% at this point in 1987.

August through October is traditionally a weak time for the market, and strategists believe the recent action aligns with seasonal weakness. While this withdrawal may seem delayed, it is likely not complete, with the possibility of continued fighting leading up to elections.

However, history provides a good takeaway: Since 1952, there have only been two losses in the last seven months of election years, suggesting that while volatility may persist, the year could still end on a positive note.