21 out of 21. What comes after the US midterms

The Liquidity Map · Stock market report

21 out of 21. What comes after the US midterms

On November 3rd, Americans vote in the midterm elections.

From those elections to June 30th, the S&P 500 has risen in every one of the 21 midterm years since 1942.

This year, the index sits near its high, but plenty of stocks are already on sale.

October 22nd, 2026 · 5 min read

Key takeaways

From the midterm elections to June 30th, the S&P? was up in 21 of 21 years, and in 14 of them the gain topped 10%.
The road wasn't straight: in 3 of 21 years it included a drop of more than 10%, the biggest in 2018.
From their 2026 highs, individual stocks gave up several times more than the index.
Small caps rose after the elections too, in all 9 cases since 1990, but they didn't beat the index every time.
I've started buying the dip in individual stocks, and Nike is one of them.

There are 12 days left until the US midterm elections. From January 1st to election day, history doesn't say much: 11 years up and 10 down, basically a coin toss.

After the vote, the picture changes completely. That's the part I want to show today, along with what I'm actually doing now.

Definition

Russell 2000

The index of the smallest 2,000 companies among the largest 3,000 listed in the US. I use it as a thermometer for individual stocks, because, unlike in the S&P 500, there's no handful of giants lifting the average.

The year

The index corrected a little, stocks a lot

On paper, the S&P had a good year. It fell 9.8% in the first quarter, down to $6,317 on March 30th, then climbed to new highs, the latest on October 6th at $7,845.

It now sits just 1.7% below that high. Underneath, the picture looks different.

The Russell 2000 is 9.7% below its August high, and Nike almost 45% below this year's high.

The Nasdaq 100? gave up 6%, and the version of the S&P where every company has the same weight, 3.4%. Small caps and individual stocks took the hardest hit.

-1.7%How far the S&P 500 sits below its October 6th high, at the October 20th close.

The S&P 500 in 2026. The first-quarter correction was the only big one this year.

How much each index gave up from its 2026 high. Nike is shown alongside as an example of an individual stock.

And now we're entering the window that matters.

The window

From the elections to June 30th: 21 out of 21

I took every midterm year since 1942 and measured the S&P from election day to June 30th of the following year, the close of the second quarter.

All 21 years ended higher. The weakest was 2014, at +2.5%.

In 14 of 21 years, the gain topped 10%.

The median? is +16.3%, and which president or party won doesn't change the pattern. If we start from October 21st, two weeks before the vote, the result is still 21 out of 21, with an average of +16.5%.

On October 8th, I wrote about October as the month when the market usually bottomed in these years.

21 of 21Midterm years in which the S&P was higher on June 30th than on election day, 1942-2022.

The S&P's gain from election day to June 30th of the following year, for every midterm year.

The average of the 21 years, plus the best and worst years, starting from today's level.

That doesn't mean the road is calm, though.

The road

21 out of 21 doesn't mean no drops

In 7 of 21 years, the S&P fell more than 5% below its October 21st level along the way. In three of them, the drop went past 10%: 1974, 2002 and 2018.

The hardest was 2018, at -15.2% by December 26th. Even so, on June 30th, 2019, the index was 6.3% higher than in October.

The statistic tells you where the market ended up, not how calm the road was.

This week marked 39 years since Black Monday, and fear of a crash is again among the most-read topics. On October 19th, 1987, the S&P lost 20.5% in a single day, yet a year later it was 23.2% higher.

3 of 21Years in which the S&P fell more than 10% along the way, before finishing higher on June 30th.

For each year: the result on June 30th versus October 21st, and the biggest drop along the way.

That leaves the question of the stocks still sitting far below their highs.

Small caps

After the elections, they rose too

The Russell 2000? has data from 1987, so I can compare nine midterm years. Since 1990, from the vote to June 30th, small caps were up every single time.

Their average was +13.6%, versus +12.3% for the S&P.

They didn't beat the index every time, but they rose with it every time.

They came out ahead in 5 of 9 cases, while in 2018 and 2022 they lagged badly. I'm not betting on a winner, but on the direction.

9 of 9Midterm years since 1990 in which the Russell 2000 was up from the vote to June 30th.

The Russell 2000 and the S&P 500, from election day to June 30th of the following year.

And a good example of a stock left behind is Nike.

Nike

Nike, 82% below its high

Nike hit $179.10 on November 5th, 2021. On October 2nd this year it fell as low as $31.97, 82% below that high.

It has since bounced to $37.88, 18.5% above the low. It's a global brand, treated like a dying business.

What fell the most in a hard year for individual stocks is also what can gain the most when appetite returns.

It's not a promise, but a risk-to-reward ratio that looks good to me right now.

-82%Nike from its November 2021 high to its October 2nd, 2026 low, both intraday.

That's where the change in positioning starts.

How we're positioned

This week's change: I've started buying the dip in individual stocks instead of just waiting. I'm buying gradually, before the elections and after, because the window runs until June 30th.

Nike is one of the stocks I'm buying, along with others that corrected far more than the index this year.

Conclusions

An index near its high and individual stocks on sale, right before a window that ended higher 21 times out of 21, is a combination I want on my side. Drops along the way don't change that.

What to watch this week

How does the market react after the November 3rd elections?
Does the Russell 2000 win back part of the 9.7% it has lost since its August high?
What does the Fed? decide at its October 28th meeting?

21 out of 21. What comes after the US midterms

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