Three weeks from now the country votes, and for the next three weeks you are going to be told what the stock market does before and after midterm elections. Most of what you hear will be one number, repeated. I wanted the whole picture, so I pulled daily S&P 500 closes back to 1950, measured every midterm the same way, and built the charts myself.

The short version: the midterm tendency is real, it is weaker than the headlines suggest, the strong part has come after the vote rather than before it, and this year the options market is paying less than usual for election risk. That last point is the one that matters to me as a premium seller, and we will get to it.

Everything below is price only, close to close, 19 midterm elections from 1950 to 2022. Election day is the close on the first Tuesday after the first Monday in November. Where I compare midterm years to other years, the other years are the same calendar window in the 56 non-midterm years from 1951 to 2024. The data notes are at the end for anyone who wants to check my work, and I would rather you did.

The S&P 500 has been higher 12 months after every one of the 19 midterm elections since 1950. The average gain over those 12 months was 14.9%. The smallest was 1.9%, after the 1986 vote. The largest was 33.2%, after 1954.

That is a real result and I am not going to pretend otherwise. For context, any 12 month window since 1950, picked at random, finished higher 74% of the time with an average gain of 9.3%. The post midterm windows beat that on both counts.

Here is what the number does not tell you. Nineteen observations is a tendency, not a rule, and anyone who has traded for a while knows how a 19 for 19 streak ends. It ends with the 20th. More important for how you position, a positive finish says nothing about the ride. After the 2018 vote the index fell 14.7% from election day to December 24 before recovering. The 12 month window still closed up 12.0%. If you were sized for a smooth 14.9%, that December was where you found out you were not.

The navy diamonds on the chart mark the 6 elections where the House changed party control: 1954, 1994, 2006, 2010, 2018 and 2022. Those years averaged 15.6% over the following 12 months, up 6 of 6. The other 13 averaged 14.6%. Whatever drives the post midterm pattern, it does not appear to be which party ends up holding the gavel. That matters this year, because the prediction markets have the House changing hands at roughly 90%, and a lot of commentary is going to treat that as the story.

In midterm years the index has gone nowhere, on average, for the 6 months leading into election day. The gain has come afterward. That is the single most useful thing in this piece, and it is the opposite of how most people trade an election.

The chart sets every midterm year to 100 at the election day close and averages the paths, with the same calendar window in the other 56 years drawn alongside for comparison. Six months before the vote, the midterm years sat at 100.1 on average. Fifteen trading days before the vote, where we are now, they sat at 98.2. Twelve months after, 114.9. The other years ran from 97.8 to 107.3 over the same stretch.

Before you get excited about that green line, look at the shaded band around it. That is the middle half of the 19 years, which means a quarter of the years sat above it and a quarter below. The band is wide the whole way. The average path is a smooth line because averaging makes things smooth. No single year looked like it.

I have traded options for more than two decades, and in every midterm year the commentary has been about who wins. The market has cared more about the calendar, and even then it has cared loosely. I treat this chart as context for position sizing and patience. It is not a reason to lean long into the vote, and it is certainly not a reason to lean long with size.

Over the last 15 trading days before a midterm election, the S&P 500 rose in 13 of 19 years, with an average gain of 2.0%. The same 15 day window in the other 56 years averaged 0.3% and finished higher 57% of the time. So there is a tilt, and it is the window we are standing in.

The range matters more than the average. The best of those windows was a gain of 11.7% in 1998, coming out of the Long Term Capital Management panic. The worst was a loss of 7.3% in 1978, as inflation and rates were climbing. A 2.0% average sitting on top of a 19 point spread is not something I would put money on by itself.

Now the cut that most charts skip. In the 6 midterms where the House changed party control, which is the outcome being priced this year, the final 15 days were up 3 times and down 3 times, with an average of 0.3%. In the other 13 years the window averaged 2.8% and was up 10 times. Six observations cannot carry much weight in either direction. They are enough to keep me from leaning on the 13 of 19 headline.

The last 5 trading days have been a little steadier: up 15 of 19, average 1.6%. The day after the election has been up 15 of 19 as well, with an average move of 0.6% and an average absolute move of 1.0%. The biggest day after was a gain of 3.9% in 1982. The worst was a loss of 2.1% in 2022, when the vote landed in the middle of a rate driven bear market and the next day's CPI print mattered far more than the count.

The best objection to every midterm chart is that stocks tend to do well from November into spring regardless of who is voting. So I tested it directly. Same windows, measured from the same calendar date, in the 56 years without a midterm.

The gap is real, and it is widest 6 months out. Over the 6 months after election day, midterm years averaged 13.6% and finished higher 19 of 19 times. The other years averaged 4.0% and finished higher 66% of the time. At 3 months the figures are 7.5% against 2.6%. At 12 months, 14.9% against 7.3%. In the first month after the vote the difference is small, 1.6% against 1.1%, which is to say the market did not rally on the result. It rallied over the two quarters that followed.

That timing matters if you trade options, because a thesis that pays off over 6 months does not belong inside a 30 day position. If you want to express a view on the post midterm tendency, the instrument has to match the horizon. A short dated credit spread is a bet on the next few weeks, and the next few weeks are the part of this picture with the least edge.

Two caveats I am not going to bury. This is 19 elections and it is price only. And several of those 19 years began their post election run from the bottom of a bear market, which is not where 2026 is starting from. The index closed at 7,807 on October 12, about 14% higher on the year and within a percent or so of its record. I checked whether the post midterm rally depended on a prior washout, and it did not. In the 7 midterm years where the index was already up 10% or more at the election, the next 12 months averaged 15.9% and were higher every time. But the sample for that question is 7, and I would not build a position on it.

Zoom out and the midterm quarter is the start of the strongest stretch in the presidential cycle. Split the last 76 years into the 16 quarters of the four year cycle, average the S&P 500 return in each, and the three best quarters sit side by side: the fourth quarter of the midterm year at 6.6%, then the first and second quarters of the following year at 7.4% and 5.0%. They finished higher 84%, 95% and 74% of the time.

The weakest quarter of the 16 is the second quarter of the midterm year, at an average loss of 2.8%. We just lived through that one, and this year it did not play to script. The worst decline of 2026 so far was about 9% into late March, against a median midterm year drawdown of roughly 16%.

Each bar is an average of 19 quarters, so individual years strayed a long way from it. The fourth quarter of 2018, the quarter this chart says should be among the best of the cycle, lost 14.0%. I remember it well, and I remember the people who had sized for the average.

I do not trade seasonality. I pay attention when a seasonal tendency and the volatility I am being paid to sell line up, and I pay closer attention when they do not. The next chart is about that.

Historically, fear has built into a midterm and bled out after it, and that is the backdrop premium sellers have been paid for. This year the fear is not in the index.

The VIX only goes back to 1990, so this chart covers 9 midterms rather than 19. Across those 9, spot VIX averaged 24.7 at 15 trading days before the vote, 21.9 on election day and 19.0 at 15 trading days after. The average path peaked about 18 trading days before the election, which is roughly where we are on the calendar, and then eased for a month. In all 9 years VIX was lower 15 days after the vote than it was on election day. I will say plainly that this last figure depends on the window I chose. At 21 days after, it was lower in only 5 of 9.

Now look at where the horizontal line sits. Spot VIX closed at 14.84 on October 9. Only 2 of the 9 prior midterms had a lower reading at this point: 2006 at 11.7 and 1994 at 14.6. Whatever election premium exists in 2026 is not sitting in spot. The average in the chart is also pulled up by 4 years when VIX closed above 30 in the weeks before the vote: 1990, 1998, 2002 and 2022. Strip those out and the other 5 years still averaged 17.1 at 15 days before the vote, above where we are.

Two things you need to know before you act on this. First, VIX options price off VIX futures, not spot, and the November and December futures were trading around 17 to 18 in the second week of October. The market is pricing some event risk, it is just further out the curve than this chart shows. Second, a low VIX going into a known event is not a free lunch for buyers of protection either. Low implied volatility with realized volatility running under 10 is a market that has been paying very little to anyone on either side.

My read is simple. When I am being paid less than usual to take election risk, I take less of it. That is a sizing decision, not a forecast.

Since 1950 a Republican president has lost control of the House in a midterm 3 times: Eisenhower in 1954, Bush in 2006 and Trump in 2018. That is the setup the prediction markets are pricing for November, with Polymarket and Kalshi both near 90% for a Democratic House as of October 12 and the Senate closer to a coin flip.

The S&P 500 was higher 12 months after each of the three, by 33.2%, 6.6% and 12.0%. The paths could hardly be more different. 1954 climbed almost without pause. 2006 drifted higher into what turned out to be the last year of that bull market. 2018 fell 14.7% from election day to December 24 before recovering all of it and more. The 2018 selloff had nothing to do with the House. It was a Federal Reserve that kept hiking into a slowing economy and a trade war that was getting worse, and it ended when the Fed changed its tone in January.

That is the honest lesson of this chart. Three elections describe what happened. They do not tell you what a change in House control does to stock prices, and anyone who claims otherwise is working from 3 data points. If you widen the net to every midterm where a Republican sat in the White House and Democrats held the House afterward, you get 9 cases, up 9 of 9 over the next 12 months with an average of 15.2%. That is the same number as the full sample, which is the point. Divided government is the normal state of affairs after a midterm, and the market has not needed a particular configuration to do what it usually does.

Nothing dramatic, which is usually the answer. Here is how the seven charts turn into decisions at my desk.

Into the vote, I stay small. The final three weeks have a mild upward tilt that disappears in the years where the House flipped, and the options market is paying me less than usual to take the risk. Less pay for the same risk means less risk. My credit spreads are sized so that a 1978 does not matter and a 1998 is a pleasant surprise.

I am not buying protection either. A VIX under 15 with realized volatility under 10 looks cheap until you remember that a hedge has to be paid for out of premium that is also cheap. A cheap hedge on a market that is not moving is still a cost. If I want a hedge into the vote, I will look at the VIX futures curve, where the event is actually priced, rather than spot.

After the vote, I expect to have more to do. The historical edge has shown up over the 3 to 6 months following a midterm, and if volatility expands into or after the election, that is when a premium seller gets paid to take the other side of the fear. I keep capital in reserve for that, and I would rather deploy it into a VIX of 25 than a VIX of 15.

All stock figures are S&P 500 daily closing prices, price only, with dividends excluded. Adding dividends would raise every return figure by roughly 2 to 4 points a year depending on the era and would not change any of the hit rates.

Election day is the first Tuesday after the first Monday in November, and the election day close is the last close on or before that date. Windows are counted in trading days from that close: 15 trading days is about three weeks, 21 is a month, 63 a quarter, 126 half a year and 252 a year. Measuring the 12 month window from October 31 to October 31 instead, as some published studies do, gives an average of 16.6% rather than 14.9%, still up 19 of 19.

The 19 midterm elections run from 1950 to 2022. The comparison set is the same calendar window in the 56 years from 1951 to 2024 that had no midterm. The House changed party control in 1954, 1994, 2006, 2010, 2018 and 2022. A Republican president lost the House in 1954, 2006 and 2018.

The VIX series begins in 1990, so the volatility chart covers 9 midterms. VIX figures are spot closes aligned to the stock market calendar. VIX options settle to the futures, not spot.

The 2026 figures are as of the October 9 and October 12 closes. Prediction market odds are as reported on October 12 and will have moved by the time you read this.

I am aware of the usual objections, and I share them. Nineteen observations is a small sample. Several midterm years, notably 1974, 2002 and 2022, had bear market lows in October that owe nothing to the election calendar, and those years do a lot of work in the averages. Published tests I have seen find that pre midterm returns are not statistically distinguishable from other years. The post midterm figures are stronger, but a tendency with 19 observations behind it is still a tendency. Trade the probabilities, size for the range, and keep score.

Probabilities over predictions,

Andy Crowder

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