Back in July we split our 1-Year Seasonal Pattern charts for DJIA and S&P 500 in half in order to highlight how various scenarios all began to align in July and August.
This year is a Post-Election Year, the Seventh Year of the Decade, the First year of a new Republican Administration and a Positive January Trifecta was recorded. Those charts have been updated with actual 2017 performance through today’s close below.
DJIA surged ahead in late July to modestly exceed the upper range of all historical seasonal patterns, but the past two days of weakness are following the historical trends timing quite closely. S&P 500 also made a move higher in July, but it stayed within the boundaries of historical seasonal patterns. Off all the patterns only the Positive January Trifecta posts a modest full-month August gain. First Elected Republicans fared the worst in August and September.
The market has largely ignored what has been going on (Russia investigations, lack of healthcare reform and minimal progress on tax overhaul/reform) in D.C. this year. The latest threats from North Korea are the first significant challenge for the new administration with potentially disastrous consequences. In the end a peaceful resolution is still the most likely outcome, but the path there could contain a market pullback trigger or two.