Historically, midterm election years have not been that kind to traders and investors and 2018 is a midterm year.
Since 1902, DJIA’s(NYSEARCA:DIA) average full-year performance in midterm years is just 4.1%. S&P 500(NYSEARCA:SPY) is slightly stronger since 1930, gaining 4.8%. Midterm years that were also the second years of newly elected presidents have been even weaker, DJIA +1.1% and S&P 500 –0.4%. New Republican presidents were only fractionally better with DJIA gaining 2.2% in newly elected Republican president second years while S&P 500 climbed just 0.3%. One positive midterm 2018 has is past years ending in “8” have averaged healthy gains (purple line in charts below). The only year DJIA has suffered a double-digit decline in years ending in “8” was 2008.