Clem Chambers: With no austerity to abandon, Barack Obama has a half-time challenge

Sell in May and come back in September is just about the oldest stock market cliché in the book. This year, however, it came true with a vengeance. The top of the market was 16 April but while the FTSE drifted down from there, it was on 27 April that the plug was pulled on the market. By the end of June the FTSE was 1,000 points lighter.

There was plenty of narrative to fit the collapse, as money piled out of the Euro with fears for the breakdown of the European Monetary Union.

It was yet another hurricane in a teacup and weeks later we are back to within a couple of hundred points of the April high.

The cycle of bearishness in the summer lull is well established. You can feel the malaise that sets into the market during summer, especially when children are out of school. It's enough to make you wonder if kids are secret traders.

So it's no big surprise that a general lack of interest turns into falling share prices.

That's not to say there were no other reasons that contributed. However, the chronic summer lull is very rarely masked by events. It is only the occasional year when circumstances are extreme enough for the pattern to be broken.

Investors really should ignore the whole seasonality cycle; look past short months and to longer yearly cycles.

One yearly cycle that will be interesting to see played out is the US presidential cycle. Normally the four-year loop has an initial two lean years followed by two fat years.

The first two years of the term, so the idea goes, is when the presidential team pulls money to one side to save for a stimulus in the last two years of the presidential term to fluff up the incumbent's chances of re-election. The first two years of austerity is blamed on the predecessor and the last two years of boom is claimed as the dividend of good management.

However the first two years of the Obama presidency have been an historic period of stimulus, so how is the administration going to follow that for the final re-election lap? If the US continues to run vast budget deficits the economy will certainly start to pick up and if there is going to be extra electioneering stimulus - starting next year - there really will be a lot of heat in the US economy.

What the US doesn't seem to realise, or perhaps doesn't care about, is that its stimulus simply flushes out of the US into Asia. The vast balance of trade deficit that the US runs means a huge proportion of the US stimulus money doesn't stimulate the US one bit, although it certainly stokes growth abroad.

This is, of course, good news for the poor billions sating American consumerism and good news for emerging markets and pretty much anyone prepared to feed the US economic behemoth.Of course it would be very easy to say how the party will end in disaster, hyper-inflation and devastation, but meanwhile the road to recovery is not going to be paved with austerity, at least not in the US or for its suppliers of consumer goods.

This is why the market looks quite perky considering the problems that need to be solved. While the printing presses roll, times will be good.

Back in the short term, we are at an interesting point and I think we will slip back a bit. This will lead to a later rally at the end of the year which will try to break this year's bear market trend and resume the bull market that set off in March 2009.

• Clem Chambers is chief executive of stocks and shares website www.advfn.com