The S&P 500 Index performed well during the 3rd quarter of 2006 by returning 5.6%. Historically, strong performance has not been a characteristic of the 3rd quarter of a mid-term election year. A review of this phenomenon is contained in the Businessweek Online link.
Does a strong 3rd quarter indicate the 4th quarter will be a weak one? Not necessarily. The old adage "sell in May and go away" is an old Wall Street mantra that has worked at times in the past. The market does have a tendency to exhibit weaker performance characteristics from May-October; however, one must look at where the Fed and the economy are within their cycles. The Fed appears to be on hold if not done raising interest rates.
In a BusinessWeek article dated May 4, 2005 titled, Sell in May, But Don't Walk Away, Sam Stovall details the potential market opportunity for the period November through April.