WD Gann referred to 60 years as the great cycle and "master" time period, as it was the summation of the third 20-year cycle. It was his observation that 20 years or 240 months was the optimum cycle for most stocks and indexes. That being the case, we looked back at the 60-, 40-, and 20-year periods to see if we could discern any pattern that might be observed. 60 years ago, in the 1960 election season (Kennedy/Nixon Nov. 8th) the market found a low on October 25th then traded higher into November 10th, it pulled back into December 1st then advanced into the end of the year. 40 years ago, in the 1980 election season (Reagan/Carter Nov. 4th) the market found low on October 31st. It posted a major high on the 5th and a significant low on the 7th then advanced into November 26th with a pullback into December 12 followed by another advance happening into year-end. 20 years ago, in the 2000 election season (Bush/Gore Nov. 3rd) the market found a low on October 18th with a high on November 6th, there was a subsequent low on December 11th with a major high one day in advance of the SCOTUS (Bush v. Gore - Dec. 12) decision in favor of Bush. After that a big low on the solstice December 21st and a rally into year-end. So, we observe on this cycle that the market tends to bottom just ahead of the election. With noted highs on November 10th, 15th, 26th, with pullbacks into December and then rallies into the end of the year. In this cycle here in 2020 the market appears to have bottomed on October 30th and is advancing as we write (Election Day). So, it fits closer to the 1980 timeline, so far, but the 2020 backdrop of lawsuits, appeals, delayed counts, news flow, and heightened polarization portends problems post-election- more mirroring the 2000 election. If the presidential election is disputed which is highly likely, it could drag out for weeks and theoretically until mid to late December. Uncertainty, as a historical market rule, generally leads to lower prices. As always stay nimble and be aware of your trade size and exposure considering the current volatility and use stop orders to protect capital.
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