On the night of the election, President Elect Barack Obama said "...at this defining moment, change has come to America."   The question is, will that change include a change in direction for the markets?  If history is any indicator, the answer is not so fast.

Earlier this month, I pointed out that while January is typically one of the strongest months of the year, Januaries following a presidential election are not as strong and are even worse after the oval office changes parties (January and the Markets).  The same is true for the rest of the year following an inauguration. 

Since the formation of the Dow in 1896, there have been 28 elections and the oval office has changed parties 12 times, including next week's upcoming change.  Here's a comparison of February - December performance since then, both with and without elections in the preceding November.

Dow (since 1896)

• All years Feb-Dec: Up 63% of the time, avg gain of 5.88%
• Feb-Dec following a presidential election: Up 53% of the time, avg gain of 4.84%
• Feb-Dec following a presidential election with a change of parties: Up 45% of the time, avg gain of 5.83%

While the average gain goes up after a change in parties (driven in part by a 68% gain in the Feb-Dec after FDR took office), the likelihood goes down.  For President Bush's first Feb. - Dec. in 2001, the Dow fell 8.76%.  It was up 2.21% in the Feb. - Dec. that followed his reelection.  Continue onto the next page for the details.

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