CHAPEL HILL, N.C. (MarketWatch) — Time is fast running out on the famously strong third year of the so-called Presidential Election Year Cycle.

We’re halfway through the third year, a period that historically has been the strongest of any six-month stretch of the four-year presidential cycle. But not this time: The Dow Jones Industrial Average over the past two quarters has risen at less than half its average pace during past cycles.

The Presidential Election Year Cycle, for those unfamiliar with it, is based on the historical tendency for the stock market to do better or worse depending on where we stand in a president’s four-year term. It rests on the unobjectionable belief that politicians will go to great lengths to get re-elected, including managing the economy.

The implication is that, immediately after assuming office, presidents swallow whatever economic medicine is necessary to set the stage for economic good times in the second half of their terms. The historical data are largely consistent with that theory, especially as it applies to third years.

Following the lead of many past researchers, I focused on fiscal years beginning with the fourth quarter. Using that calendar, we are just beginning the third quarter of the third year of the current presidential term. Since the Dow Jones Industrial Average DJIA, -0.87% was created in 1896, the stock market during third years has gained an average of 15.6%, nearly triple the 5.3% average for the other years of the cycle.

The chart at the top of the this page goes further, segregating the data into quarters. Notice that the two strongest quarters of third years are the first two, and that the cycle’s average begins to drop off in the third quarter. By the third year’s fourth quarter — the one that in the current cycle begins this coming July 1 — the historical average return is only 0.8%, which is well below the 2% average for all other quarters of the entire cycle.

An additional worry is that, besides entering into the waning phase of the presidential cycle’s third year, another cycle is about to turn bearish. I’m referring to the infamous pattern that goes by the phrase “sell in May and go away.”

To be sure, the historical averages I cite mask considerable year-by-year and quarter-by-quarter variability. It would not be unprecedented for the stock market to be a stand-out performer over the next six months.

But it’s also possible that the market has gotten ahead of itself. The Federal Reserve’s extraordinary monetary stimulus might have transferred into past years the strength that the stock market would otherwise have been expected to experience in this current third year. It certainly was the case that the stock market was far stronger than average during the first two years of the current four-year cycle.

In any case, it can’t be good news for the bulls that seasonal winds will soon stop blowing in the direction of higher prices.

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