Wall Street’s Rally Has Been Remarkably Calm. History Says the Next 8 Weeks Could Be Different.

Wall Street’s 2026 rally has broadened well beyond the megacap stocks that have dominated the market in recent years. But just as more stocks are joining the advance, investors are entering a period of the calendar that has historically been remarkably volatile during midterm election years.

The S&P 500 Equal-Weighted Index is up about 15% so far in 2026, outperforming the roughly 12% gain in the traditional S&P 500, according to Yahoo Finance. That gap is significant because the regular S&P 500 is weighted by market capitalization, giving giants such as the largest technology companies an outsized influence over its performance.

The equal-weight index, by contrast, gives every company the same importance, offering a clearer picture of how the average large U.S. stock is performing. And this year, that average stock has been having an impressive run. The problem is what has historically happened next.

BTIG technical strategist Jonathan Krinsky warned that the market has reached a particularly difficult seasonal period during midterm election years. “Looking at the average seasonal pattern of midterm election years since 1990, [the S&P 500 Equal-Weighted Index] has peaked on August 18 before a pretty rough stretch into mid-October,” Krinsky wrote.

Yahoo Finance independently analyzed the historical data, comparing midterm election years with all other years going back to 1990. Between August 18 and October 11, the equal-weight S&P 500 has fallen an average of about 6% during midterm election years. During the same period in non-midterm years, returns have been essentially flat.

The pattern extends beyond the equal-weight index. During that August 18 through October 11 window, the traditional S&P 500 has historically declined about 5% in midterm election years.

The Nasdaq Composite has lost roughly 7%, while the small-cap Russell 2000 has dropped roughly 8%. In other years, all three indexes have historically produced returns ranging from roughly flat to positive during the same period.

However, historical market patterns can weaken or disappear, and 2026 has already deviated considerably from the typical midterm-year trajectory. Other well-known seasonal strategies, including the old “sell in May and go away” rule, have also become less reliable over time.

Still, the remarkable absence of widespread selling is drawing attention. Krinsky noted that 2026 has not experienced a single trading session in which declining stocks represented more than 80% of trading volume among stocks listed on the New York Stock Exchange.

The average year produces 21 such sessions. In Krinsky’s data covering the past three decades, no year recorded fewer than five. So far, 2026 has recorded zero. Volatility has been similarly subdued.

The CBOE Volatility Index, or VIX, which measures expected S&P 500 volatility over the coming 30 days and is frequently described as Wall Street’s fear gauge, has been trading near its lowest levels of the year.

That means investors are entering what has historically been one of the most challenging stretches of a midterm election year without having experienced significant broad-market selling and with relatively little apparent demand for downside protection.

The timing is particularly notable because the strength of the 2026 rally has encouraged investors to move further out on the risk spectrum. A broader group of stocks has participated in the advance, while some of Wall Street’s riskiest trades have returned to favor.

Krinsky argues that the combination of strong gains, unusually low volatility, and an unfavorable seasonal history provides a reason for investors to become more cautious heading into the fall.

“In summary, we think this is a very attractive time to pare down risk, or look at hedging broad-based equity exposure as we enter a very difficult part of the calendar, historically speaking,” Krinsky said.