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February Almanac: Can be Challenging in Election Years
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By:
Jeffrey A. Hirsch & Christopher Mistal
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January 23, 2020
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Even though February is right in the middle of the Best Six Months, its long-term track record, since 1950, is rather tepid. February ranks no better than sixth and has posted meager average gains except for the Russell 2000. Small cap stocks, benefiting from “January Effect” carry over; tend to outpace large cap stocks in February. The Russell 2000 index of small cap stocks turns in an average gain of 1.2% in February since 1979—just the sixth best month for that benchmark.
A strong February in 2000 boosts NASDAQ and Russell 2000 rankings in election years. Otherwise, February’s performance, compared to other presidential-election-year months, is mediocre at best with no large-cap index ranked better than sixth (DJIA and S&P 500 since 1950, Russell 1000 since 1979).
The first trading day is bullish for DJIA, S&P 500 and NASDAQ. Average gains on the first day over the last 21-year period are right around 0.4%. Strength then tends to fade after that until the stronger sixth, eighth, ninth and eleventh trading days. Expiration week had a spotty longer-term record but has been improving recently. Russell 1000 and Russell 2000 have advanced for 10 straight years during options expiration week. The week after also had a clear negative bias that appears to be fading even though averages losses remain across the board for the past 30 years.
Presidents’ Day is the lone holiday that exhibits weakness the day before and after (Stock Trader’s Almanac 2020, page 100). The Friday before this mid-winter three-day break can be treacherous and average declines persist for three trading days after the holiday going back to 1980.
| February (1950-2019) |
| |
DJI |
SP500 |
NASDAQ |
Russell
1K |
Russell 2K |
| Rank |
|
8 |
|
9 |
|
8 |
|
9 |
|
6 |
| #
Up |
|
42 |
|
39 |
|
27 |
|
25 |
|
24 |
| #
Down |
|
28 |
|
31 |
|
22 |
|
16 |
|
17 |
| Average
% |
|
0.3 |
|
0.1 |
|
0.7 |
|
0.4 |
|
1.2 |
| 4-Year Presidential Election Cycle Performance
by % |
| Post-Election |
|
-1.1 |
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-1.5 |
|
-3.3 |
|
-1.3 |
|
-1.6 |
| Mid-Term |
|
0.7 |
|
0.5 |
|
0.7 |
|
0.8 |
|
1.4 |
| Pre-Election |
|
1.4 |
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1.2 |
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2.8 |
|
1.7 |
|
2.7 |
| Election |
|
-0.1 |
|
0.1 |
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2.5 |
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0.3 |
|
2.2 |
| Best & Worst February by % |
| Best |
1986 |
8.8 |
1986 |
7.1 |
2000 |
19.2 |
1986 |
7.2 |
2000 |
16.4 |
| Worst |
2009 |
-11.7 |
2009 |
-11.0 |
2001 |
-22.4 |
2009 |
-10.7 |
2009 |
-12.3 |
| February Weeks by % |
| Best |
2/1/08 |
4.4 |
2/6/09 |
5.2 |
2/4/00 |
9.2 |
2/6/09 |
5.3 |
2/1/91 |
6.6 |
| Worst |
2/20/09 |
-6.2 |
2/20/09 |
-6.9 |
2/9/01 |
-7.1 |
2/20/09 |
-6.9 |
2/20/09 |
-8.3 |
| February Days by % |
| Best |
2/24/09 |
3.3 |
2/24/09 |
4.0 |
2/11/99 |
4.2 |
2/24/09 |
4.1 |
2/24/09 |
4.5 |
| Worst |
2/10/09 |
-4.6 |
2/10/09 |
-4.9 |
2/16/01 |
-5.0 |
2/10/09 |
-4.8 |
2/10/09 |
-4.7 |
| First Trading Day of Expiration Week: 1990-2019 |
| #Up-#Down |
|
19-11 |
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23-7 |
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19-11 |
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23-7 |
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21-9 |
| Streak |
|
D1 |
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U6 |
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U6 |
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U6 |
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U6 |
| Avg
% |
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0.3 |
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0.3 |
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0.2 |
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0.3 |
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0.2 |
| Options Expiration Day: 1990-2019 |
| #Up-#Down |
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16-14 |
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13-14 |
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12-18 |
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14-16 |
|
12-15 |
| Streak |
|
U3 |
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U3 |
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U1 |
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U3 |
|
U6 |
| Avg
% |
|
-0.04 |
|
-0.2 |
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-0.3 |
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-0.2 |
|
-0.05 |
| Options Expiration Week: 1990-2019 |
| #Up-#Down |
|
19-11 |
|
18-12 |
|
18-12 |
|
18-12 |
|
21-9 |
| Streak |
|
U5 |
|
U5 |
|
U6 |
|
U10 |
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U10 |
| Avg
% |
|
0.6 |
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0.4 |
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0.4 |
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0.4 |
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0.6 |
| Week After Options Expiration: 1990-2019 |
| #Up-#Down |
|
14-16 |
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15-15 |
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18-12 |
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15-15 |
|
16-14 |
| Streak |
|
U4 |
|
U4 |
|
U6 |
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U4 |
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U2 |
| Avg
% |
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-0.4 |
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-0.2 |
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-0.2 |
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-0.2 |
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-0.1 |
| February 2020 Bullish Days: Data 1999-2019 |
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3,
13, 18 |
3,
10, 12, 13, 18 |
3,
10, 12-14 |
3,
10, 12, 13, 18 |
3, 6, 12-14, 18 |
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18,
25, 26 |
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19, 26, 27 |
| February 2020 Bearish Days: Data 1999-2019 |
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4,
21, 28 |
21,
28 |
5,
21, 28 |
21,
28 |
5, 28 |
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