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The Dow is on the verge of doing something it hasn't done since 1939 - and it's not good

Myles Udland   

The Dow is on the verge of doing something it hasn't done since 1939 - and it's not good
Finance2 min read

The Dow Jones Industrial Average has lost about 1.5% so far this year.

And while stocks usually go up, the decline in the blue chip index this year has been particularly surprising given that it's the year before an election.

Even more bullish for stocks heading into 2015 was data showing that years ending in "5" following a mid-term election have been uniformly positive for stocks.

Alas, 2015 has not been that kind of year.

Here's Charlie Brown, director of floor communications at the NYSE (emphasis ours):

What was once viewed earlier in the year as a positive year for the Dow is currently negative to date. I am reminded lately by traders and a myriad of articles that typically the year before an election year is the strongest of a 4-year presidential term. On average (based on data going back to 1933), the Dow Jones Industrial Average gains 10.40% during pre-election years. So far, we are facing negative growth during a pre-election year which would mark the first time this has happened since 1939, according to the traders almanac. However, the year is not over until, as they say, the "fat lady sings." It is the general sentiment amongst the trading community that we will rally into the close of the year. We shall see if it is enough to reverse the fortunes of the Dow.

Now, there's no strong fundamental underpinning of so-called "Election Cycle" analysis of the stock market, but this is still a thing folks out there are paying attention to.

For better or worse.

On Friday, the Dow was up about 130 points and higher for the third straight day, though the index was still below the level where it say ahead of the Federal Reserve's interest rate announcement last Wednesday.

But overall investors and traders waiting for the "Santa Claus" rally to materialize, as the final 15 trading days of the year are higher about two-thirds of the time, according to data from Bespoke.

This year, however, this has been a major disappointment.

Screen Shot 2015 12 23 at 1.57.33 PM

Bespoke

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