S&P 500 Bullish Trend Intact as Midterm Seasonality Turns Favorable

The S&P 500's underlying bullish trend remains intact despite post-election selling pressure, according to Swissquote, with three major technical support levels still holding and historical seasonality pointing upward.

US equities went through a short-term consolidation phase in October, driven by profit-taking in the technology sector and, more specifically, in semiconductors. That sector has undergone a controlled retracement over six months, from June to early November, in the wake of the US midterm elections.

Swissquote views this pause as an opportunity rather than a warning sign. The firm's reasoning rests on two pillars: a recurring seasonal pattern stretching back more than half a century, and a cluster of technical support levels that the market has so far refused to break.

Why does history favor the months after midterms?

An analysis of market data spanning more than 50 years, cited by Swissquote, shows that US equities have historically tended to rise over the 12 months following midterm elections. The pattern is particularly strong when the months leading up to the vote have seen a period of consolidation — exactly the setup the market delivered this time.

A chart sourced from Morgan Stanley and Bloomberg shows the S&P 500 has historically risen significantly in the months following US midterm elections, especially when the stock market consolidated beforehand.

The midterm elections produced a complete Democratic victory in both the US Senate and the House of Representatives. The market reaction was not kind. Stocks came under downward pressure amid concerns about the outlook for AI capital expenditure in the United States, as investors fear Democratic legislative initiatives could slow AI investments by hyperscalers.

The semiconductor sector has been correcting since last June, but Swissquote argues the situation could improve over the coming months — particularly if concerns surrounding the Democratic victory gradually fade.

The caveat is obvious: seasonal tendencies describe averages, not guarantees. A Democratic Congress with legislative leverage over AI spending is a specific political risk that 50 years of historical data cannot fully price.

Takeaway: history favors the bulls for the 12 months after a midterm vote, but only if the AI-spending fears that triggered the selloff subside.

What do the charts say about the S&P 500's trend?

The reaction of US stock indices was highly erratic in the hours following the midterm election results, but selling pressure ultimately prevailed. That raises the central question: is the S&P 500's underlying bullish trend under threat?

According to Swissquote's technical analysis, the answer is no. No major support level has been breached. The firm argues the proximity of these supports could actually help stabilize the market.

Three technical levels remain intact:

• The upper boundary of a long-term ascending chart pattern, which the market broke above last April
• The weekly Ichimoku Kumo cloud
• The 200-day moving average and an upward trendline in place since spring 2025

Swissquote notes that with historical seasonal patterns favoring the US stock market in the months following midterm elections, these major support levels deserve close attention, as they could pave the way for a market recovery.

The analysis draws on weekly and daily Japanese candlestick charts of the S&P 500 index. It follows the firm's recent separate analyses of the SOX semiconductor index and the S&P 500 Technology sector.

The skeptic's note: technical levels hold until they don't. The analyst frame treats proximity to support as stabilizing; a break below the 200-day moving average would flip that same observation into a bearish signal.

Takeaway: the trend survives on paper, but it now sits close enough to its key supports that the next leg — recovery or breakdown — should reveal itself quickly.

Swissquote's disclaimer states the content is for information purposes only, does not constitute investment advice, and that past performance is not a guarantee of future results.

For investors, the actionable question is whether the 12-month post-midterm window outweighs a fresh legislative risk to AI spending that historical precedent never had to discount.