S&P’sitting Sam Stovall says the S&P 500 index’s showing in the months leading up to the appointment by vote has been a good predictor of the winning partaker

By Sam Stovall From Standard & Poor’s Equity Research

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Election junkies are poring over countless polls and other predictive tools to get a interpret upon who will win the U.S. Presidential call in question on Nov. 4 between Senators John McCain (R-Ariz.) and Barack Obama (D-Ill.). But they might also want to take a look at what the stock market has to say.

Historically, the price representation of the Standard & Poor’s 500-stock index during the three almanac months leading up to the U.S. Presidential power to choose has been a good predictor of whether the President or his party would be reelected or replaced.

Take a took at the accompanying table. An S&P 500 price rise traditionally has predicted the reelection of the incumbent body or party, while a price decline has pointed to a replacement. Since 1928, this choice prognostication technique has done an excellent job, in our witness, recording a 79% exactitude set a value on in predicting the reelection of the party in power and an 83% success rate in pursuit for a change of party.

The model’s ability to identify changes in civic parties that occupy the White House was supreme, like it was correct five of six seasons for an 83% success rate. The only time it incorrectly forecast a change in some one was in 1956. The market’s three-month decline of 7.7% did not spring the unseating of President Dwight Eisenhower by Adlai Stevenson, probably because everybody still liked Ike.

What about this year? Since the S&P 500 has declined 24.7% from July 31 through Oct. 30, it would have being fair to say that the model points to—but does not assurance—an Obama victory.

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