LIVE MARKETS-How to play the midterms: Let it ride

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HOW TO PLAY THE MIDTERMS: LET IT RIDE

That blizzard of ads, spam and robocalls can mean only one thing: midterm elections are coming up, in case you hadn't heard.

Ryan Detrick, chief market strategist at Carson Group in Omaha, published a note reminding investors what to expect.

First, Detrick warns against predicting how a certain sector will react to the results. For example, following Biden's successful presidential bid, "we heard that marijuana stocks would go higher ... and coal stocks would collapse," Detrick writes. "Well, we saw the exact opposite."

Detrick also reminds us that bitcoin was expected to do well under Trump's second term. It hasn't.

Beyond that, Detrick says "the motivated party is the party that lost the presidential election, which in this case would be the Democrats." On average, 25.7 House seats are lost by the president's party, and 3.6 seats in the Senate. In fact, going back to 1934, the president's party has lost seats in all but three midterms.

Additionally, stocks tend to prefer a split Congress, because gridlock often translates into fewer regulations. The average annual return when the chambers are led by different parties is 15.1%, compared with 8.1% under a unified congress.

Regardless of the outcome, the stock market tends to perform well in the aftermath of midterm elections. Over the past 19 midterms, going back to 1950, the S&P 500 has gained an average of 14.8%.

Here's a look at the 100-day performance of the S&P 500 following the last five midterm elections:

(Stephen Culp)

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