Election years are good stock market years
US stock market ahead of megatrend buy signal with extremely
high profit potential after midterm elections
Historical experience shows that US presidential election years are usually good stock market years.
There is also a very important historical peculiarity in the midterm elections, the midterm elections in the middle of a president's term in office, where the two chambers of Congress, the House of Representatives and the Senate, will be re-elected on November 3, 2026:
In the immediate aftermath of the midterm elections, the U.S. stock market is experiencing one of the most reliable and strongest upward periods in history of the entire 4-year presidential cycle.
The following 9 months after the midterm elections are thus the best stock market months in the entire 4-year presidential cycle. as the chart for the Dow Jones shows. (4 Year Election Cycle)
Historical data shows a remarkable phenomenon: In the past 20 midterm elections since World War II, the S&P 500 has never had a negative overall balance in the 9 to 12 months following the election.
Before the midterm elections, September and October are the seasonally weakest stock market months. Therefore, the US stock market tends to weaken here, and the uncertainty before the elections is also a burden.
As soon as the midterm elections are over, the two strongest stock market months of November and December begin, which has a very positive effect, in addition to the certainty of the election result, which offers additional security.
Financial markets hate uncertainty. As soon as the future balance of power in the House of Representatives and Senate has been determined, companies will be able to reliably calculate regulatory and tax framework conditions again. Often, the incumbent president's party loses seats in the midterms, leading to a divided government. For Wall Street, this stalemate is usually positive, as radical changes in the law or tax increases are blocked and economic policy remains predictable. In the year after the midterms, the incumbent US administration usually switches to election campaign mode for the next presidential election. There is an increased attempt to stimulate the economy through targeted measures or growth-promoting rhetoric and measures to put voters in a positive mood.
The combination of the typical year-end rally pattern (November to January) and the resolution of political uncertainties ensures above-average gains.
Typical seasonality suggests that the traditional weak phase in September and October of a midterm year, with often significant corrections, offers the perfect strategic entry point.
In the months following the midterm elections, the S&P 500 has risen by an average of 6% since 1950
The average 12-month yield has been 15.4% since 1950.
Historically, therefore, an extremely strong phase of explosively rising share prices begins from November 2026, which offers a fantastic buying opportunity within the framework of a megatrend buy signal with an extremely high profit potential.
This chart shows the seasonal trend of the S&P500 over the past 40 years. The weakest stock market months are September and October, followed by the two strongest, November and December. So, the best time to buy starts in October.
According to current polls, President Trump and his Republican Party will lose their majority in the House of Representatives. In the Senate, too, the narrow majority of only 1 seat is at great risk.
The most important election issue for voters remains the issue of inflation. The high energy prices due to the Iran conflict significantly reduce Trump's election chances, as there is no positive solution to the Iran conflict for the time being, what you see is an ongoing game of escalation and de-escalation. The goal and interest of the Iranians is to weaken Trump by keeping energy prices high so that Trump loses the midterm elections. Trump is powerless, in order to achieve falling oil prices and thus falling inflation, the Strait of Hormuz must be opened permanently and the Iranians have the upper hand. Iran's delaying tactics clearly demonstrate its willingness for Trump to lose the midterm elections.
In general, it is often the case that the party that provides the president loses the midtermwalen. This time, too, it looks like it, which will have a very positive effect on the US stock market. Trump's negative decisions on tariff policy and the Iran war cost him the majority in Congress. This means that he is limited in tariff policy and can no longer wage war, as the Democrats will prevent this with a majority in the House of Representatives.
Thus, the US stock market can once again focus on corporate profits, the most important reason for the development of share prices, which are always determined by profits in the long term.
Companies in the S&P 500 Index achieved record gains of 47% in Q2 2026 since 1976 (excluding Covid), i.e. for 50 years. Tech stocks in the AI sector even achieved more than 100% higher profits than in the same quarter of the previous year.The main drivers were the tech stocks in the wake of the megaboom in AI, some of which more than doubled their corporate profits. In 2027, the profits of US companies will again rise sharply.
A dream environment has developed that leads to a megatrend buy signal on the US stock market
1. Perfect post-midterm election period with the greatest profit potential in the 4-year presidential cycle
Historically since 1950 with a return of 15.4% in the next 12 months.
2. US companies in the S&P 500 are recording explosive earnings growth, the highest corporate profits since 1976 (excluding Covid) in Q2 2026 at 51% year-on-year.
3. AI Megaboom with Agentic AI, robotics and quantum computing are driving historic and fantastic corporate profits like never before.
4. The U.S. economy is growing very strongly, with nearly 4% in the third quarter of 2026, along with good economic data and a labor market that is very stable with a 4.1% unemployment rate. The important ISM Manufacturing PMI has risen for the 7th time in a row, confirming the strong growth.
The strong expansion of AI infrastructure contributes about 1% to economic growth, as does the large increase in the defense budget.
5. Stock valuations have fallen and with a P/E ratio of 20 in the S&P 500, they are very cheap, while at the same time corporate profits have skyrocketed. This dream combination will bring more big stock gains.
6, The market breadth has now reached all sectors in the S&P 500, which means that not only the AI sector is increasing. but also the banking, insurance, pharmaceuticals, oil and energy, industry, automobiles, armaments sectors, which are showing relative strength, which is a very positive signal in the long term.
7. The weakest stock market months, September and October, and the political uncertainty right before the midterm elections are causing a correction in stock prices. This leads to an optimal buying time in mid to late October 2026.
8. The best months in the stock market year with November and December begin immediately after the midterm elections, and the certainty of the election outcome, which provides additional security, is a very important combination that ensures sharply rising prices.
9. Trump loses the House of Representatives with the Republican Party and is limited in his crazy, unpredictable and dangerous policies such as tariffs and the Iran war, which have had a negative impact on the US stock market due to rising inflation.
UPDATE 09/15/2026:
According to the latest polls, the Democrats are set to win the House of Representatives by 78%, confirming our July forecast.
The race in the Senate is very close, so we can't make a clear prediction yet.
A divided Congress would be the best outcome for the stock market.
10. For 65 months, inflation in the U.S. has been far from the target of 2%, currently standing at 3.7%. Since there is no quick solution to the Iran conflict and the war is very likely to continue through the midterm elections, the ongoing mutual attacks could even extend the Iran conflict until 2027.
Due to this negative development, oil prices will not only stay high for a longer period but could rise even further.
The new Fed chair, Kevin Warsh, mentioned in his speech at the central bank meeting in Jackson Hole on August 28, 2026, that the inflation rate is far too high.
He is being forced by the further rise in oil prices to raise interest rates in order to seriously combat the far-too-high inflation while also maintaining credibility and independence. It's a tricky balancing act for Kevin Warsh to raise rates at the September 16 and late October meetings before the midterm elections without provoking Trump, who is demanding a rate cut from the US central bank.
At the latest, at the December meeting after the midterm elections, Kevin Warsh will have to raise rates.
The strong US growth momentum can't be stopped even by one or even two rate hikes.
Update 09/15/2026:
We expect an interest rate hike at the FED meeting on September 16 by 0.25%. The FED FUNDS will be in a new range of 3.75 to 4.0%.
11. Leading analysts from U.S. investment banks such as Goldman Sachs and Morgan Stanley, as well as the largest U.S. banks such as JP Morgan, Wells Fargo, Bank of America, Citigroup and Swiss bank UBS, have all raised their targets in the S&P 500 due to explosive earnings growth
BlackRock's CIO Rick Rieder mentioned in an interview with CNBC (08/20/2026) that he considers the current investment environment the BEST and MOST EXCITING!!! BLACKROCK is the world's largest asset management company, with $15.3 trillion in assets under management.
12. Based on the 11 positive points listed here, a MEGATREND BUY SIGNAL emerges, which on average only occurs every 5 years. This leads to an excellent risk/reward ratio with huge profit potential. The risk is negligible due to the many positive factors in the ongoing AI investment boom. JR Financial Research sees the current investment opportunity in the AI revolution as even bigger than all previous technologies over the past almost 60 years, including the Internet.
Our top picks, Nvidia and Micron, both have profit potential of over 100% by the end of 2027.
This is due to sharply rising revenues and profits while valuations remain extremely low.
The chips from Nvidia and Micron are already sold out for 2027
JR Financial Research expects, due to the many points listed here, an explosive rise in the S&P 500 of up to 20% from mid to late October in a perfect market environment and dream scenario until summer 2027.
That would mean about 1,500 points gain in the S&P 500 and could make it explode to over 9,000 points by summer 2026.
The strong long-term upward trend in the S&P 500 will continue and could reach the magical mark of 10,000 points during 2028.
