Presidential Cycle overnight perspective
The Presidential Cycle is a well-known stock market phenomena. There are 4 years in the cycle:
– Election year
– Post-Election year
– Midterm year
– Pre-Election year
I decided to run a backtest on SPY since its inception in 1993 to see whether this long term seasonality/cycle had an effect on overnight trading.
The answer to this question is yes, as you can see from the sheet above.
I considered trading all nights only during the traditional bullish months for stocks:
January – February – March – April – November – December.
I would say Midterm and Pre-election years to be the 2 best years with above 1,33 profit factor and lower % drawdown. Post election year is acceptable, nearly the same values as Pre-Election year.
It is clear that Election year is terrible for overnight trading with very low profit factor and very high % drawdown.
Anyway these results are not tradable but they can offer traders an idea of where one of the most famous long-term bias lies.
If you have any questions, please write me at: nightlypatterns@hotmail.com
Marco Simioni
NIGHTLY PATTERNS - Overnight Trading 