The prolific and thorough folks at CXO Advisory Group have a couple of interesting posts up on the topic of seasonality and the markets.

The first has to do with the seemingly anomolous activity in the stock market in December. In contrast with history December 2005 looks odd, with marked weakness in the last week of the year. It will be interesting to see if this has any effect on January’s returns.

The second post has to do with the presidential election cycle. Their research, which echoes that of previous research, implies a weak first half to 2006 with strong returns in the second half. We noted another interesting graph on the performance of the stock market during the second year of the presidential cycle.

Seasonality is an intersting topic, but must be examined with tempered expectations. One should remember that these cycles represent tendencies, not lock-solid predictions. Informed investors should be aware of the historical implications of the calendar.

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