Jay Kaeppel, a senior research analyst at SentimentTrader, examined what history can tell us about what might happen next by looking at the historical performance of stocks in the six months after past presidential elections going back to 1944.
While it's tough to draw any conclusions regarding sector performance, Kaeppel noted that small caps were the leading factor nine times, including in the wake of each of the past three presidential elections.
"For several years, large-cap and/or growth stocks have been the top-performing factors, hands down. Is that all going to change over the next six months?" Kaeppel wrote in a Wednesday client note.
Of note, the sharp jump in long-term Treasury yields TMUBMUSD10Y
4.310% since the Fed's September rate cut has pushed up 30-year fixed rate mortgages and borrowing costs for the economy, which if sustained could risk triggering a recession and derail stocks.
Kaeppel said the near-term question for traders will be whether it's time to consider allocating away from large-cap and/or growth stocks and to move into small-caps and/or value equities.
"History suggests such a move may be worthy of consideration," he said, while warning there aren't any guarantees for the 2024-25 post-election period.