Earlier this week, we said that the market may be predicting another Trump upset, but another indicator is predicting our incumbent president's loss. The "Presidential Predictor," popularized by Sam Stovall, CFRA's chief investment strategist, tracks the S&P 500 performance from July 31 to October 31. Going back to 1944, it has found that a positive move over that period usually translates to an incumbent victory, while a negative move translates to a loss.
With a weak finish Friday, the S&P finished just slightly negative for the 3 month period. After the close, Stovall said in an email, "The Presidential Predictor implies, but does not guarantee, a Biden victory."
While it isn't guaranteed, the indicator has correctly predicted an incumbent loss 88% of the time since 1944 and has made the correct call six straight times dating back to 1960.
The prediction market is also showing positive signs for Biden. This isn't an exact repeat of 2016. Biden has had a consistent lead over Trump for months now while Clinton held just a +1.3 percent lead 5 days before the election while Biden holds a 7.7 percent lead according to Real Clear Politics. Trump's path to victory appears much more challenging and with so much early voting, even a weekend surprise may not be enough to change his fortunes. Hopefully we will have a clear cut winner on Election night so we can all move on...
"Vice President Joe Biden visit to Israel March 2016" by U.S. Embassy Jerusalem is licensed under CC BY 2.0