Key Points:
Historical U.S. Q1 averages are strong, in fact, the second best among the four quarters. The S&P 500 is up 3% on average in Q1s since 1970.
In third years of presidential cycles, averages are much better. The S&P 500 has averaged an 8% gain in third-year Q1s since 1970.
Retail and Tech have the best sector averages, up 13% and 12%, respectively, in third-year Q1s. When Tech has struggled, averages have also been much weaker.
If the market begins Q1 below its 200-DMA (four cases: 2003, 1991, 1979, 1975), the S&P 500 average is still excellent, up 12%.
Given negative S&P returns in Q4, historically January is up 2.4% on average (11 instances) but Q1 is down 2.0% on average.
In the two cases when this coincided with third years of presidencies (1995 and 1979), both January and Q1 returns were positive.
