Almanac Trader — Down Q1 Can Lead to More Trouble

This is no April Fool’s joke. Adding
to our concerns that the market in 2025 continues to track less bullish
post-election year scenarios is the history of market performance following
down first quarters, especially in post-election years. First the good news.
April has been up on average and about 63% of the time. Q4 has been even
stronger. Though both April and Q4 have taken some hits as well.

But unfortunately, Q2 and Q3 have
been weak overall and Q3 especially in post-election years. Most compelling is
that if the market had already achieved bear market levels when Q1 was down it
was usually near a bottom or low point from which the market rallied
substantially. Conversely, if Q1 is negative and the market has not reached
bear market status or is not far from a recent all-time high, then we have more
often than not experienced further market trouble and downside action over the
subsequent nine months.

Several of the weak republican
post-election years discussed on page 28 of the 2025 Almanac also standout:
1953, 1957, 1969, 1973, 1981 as well as 1977, Jimmy Carter’s difficult first
year. There are several other non-post-election years of concern, most recently
2022. The most impressive turnarounds from down Q1s occurred at or near the
ends of bear markets in 1980, 1982, 2003, 2009 and 2020 after Covid-19 induced
the shortest bear market on record.