Since WWII, history suggests 100% chance of post-midterm election rally 

A long-time Wall Street market watcher is offering investors encouragement.

According to LPL Financial's Ryan Detrick, the stock market's wild swings will likely fade following Tuesday's midterm elections.

His case stems from history. He went back to World War II, found all of the October closes in midterm years and tracked what happened until the end of the year. The results came in bullish.

"Eighteen out of 18 times, the S&P was higher from the October low close — up just over 10 percent on average," the senior market strategist said Thursday on CNBC's "Trading Nation."

Over the past month, the S&P 500 is down more than 6 percent, During that period, its lowest closing came Monday, 2,641, and has gained almost 4 percent since then.

Detrick pointed out the recent downturn isn't unusual. During a midterm year, his data show the S&P 500 has actually been negative year to date in early October.

"Look at the last couple of elections we've had; 2014 midterms: We had a big sell-off into the middle of October, then a bottom, then a rally," he noted, adding that nearly all of the year's gains happen in the final months of the year.


Once Tuesday's midterms get out of the way, he said, seasonals will dominate the market. That's when a "surprise" year-end rally could take over, according to Detrick.

"That October 29 low, especially with the strength we've seen in the last couple of days, really could be a pretty major low," Detrick said.

— CNBC's Keris Lahiff contributed to this article.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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