February Almanac: Mediocre in Election Years
By: Jeffrey A. Hirsch & Christopher Mistal
January 18, 2024
February is in the middle of the Best Six Months, but its long-term track record, since 1950, is not that impressive. 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; historically tend to outpace large cap stocks in February. The Russell 2000 index of small cap stocks turns in an average gain of 1.0% in February since 1979—sixth best month for that benchmark. Russell 2000 has had a tough January which could indicate the January Effect may not boost small caps this February.
[Election Year February Performance Mini Table]
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 tenth (DJIA and S&P 500 since 1950, Russell 1000 since 1979). 
[February 2024 Seasonal Pattern Chart]
The first trading day of February is bullish for DJIA, S&P 500, NASDAQ, Russell 1000 and 2000. Average gains on the first day over the most recent 21-year period range from 0.39% by DJIA to 0.75% by Russell 2000. However, after a strong opening day, strength has tended to fade until around the seventh trading day. From there until around the 12-trading day all five indexes have historically enjoyed gains. But those gains have not held through the end of February. Mixed election-year February performance has NASDAQ and Russell 2000 following a similar trajectory to the last 21 years, but with gains holding through the end of the month while the other indexes wander through the month to modest average losses.
Monthly options expiration week had a spotty longer-term record and was improving prior to the arrival of Covid-19 in 2020. Since, the week has been down three or four times depending on the index. S&P 500 and Russell 1000 have been down four weeks straight. The week after was also improving prior to 2020 but has returned to its bearish longer-term tendency.
Presidents’ Day is the lone holiday that exhibits weakness the day before and after (Stock Trader’s Almanac 2024, 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. In recent years, trading before and after the holiday has been more bullish. S&P 500 has been up 10 of the last 13 years on the day before and NASDAQ has been up 7 of the last 11 years on the day after.
[February 2024 Vital Stats Table]