Presidential campaigns are in full swing and November is just around the corner. Investors and politicos are carefully monitoring the equities market to try to glean any hints. With stocks and exchange traded funds rallying, the incumbent may hold out, S&P analysts say.

Since 1900, when the S&P 500 increased in the three months from July 31 through Oct. 31, the incumbent was re-elected, with an accuracy of 80%, Sam Stovall, Chief Equity Strategist for S&P Capital IQ, wrote in a research note.  The S&P recorded a 6.1% rise on average during these election years. [S&P 500 ETF at Highest Level Since 2008]

SPDR S&P 500 (NYSEArca: SPY) is up about 4.8% since July 31.

On the flip side, during eight elections since 1900, the party in power was voted out 88% of the time whenever the S&P declined in the July to Oct. period – the S&P saw a sell-off of 5.1% before the incumbent was replaced.

“I believe it has more to do with the pain than the person,” Stovall noted. “I believe Americans must be convinced that the economy is being so mismanaged that they would be willing to trade a known quantity (the incumbent) with an unknown quantity (the challenger).”

If Obama stays in the Oval Office, homebuilders would benefit from the further government aid. [Case-Shiller Prices and Pending Sales]

“We are likely going to end up with a leaner inventory of foreclosed homes, which therefore creates demand for new homes,” Stovall said in a CNBC report.

  • SPDR S&P Homebuilders ETF (NYSEArca: XHB)
  • iShares Dow Jones US Home Construction Index Fund (NYSEArca: ITB)

The  health care sector would strengthen on the influx of new customers. [Healthcare ETFs Hitting Resistance]

“Even though [pharmaceuticals]may take an earnings hit as a result of the fines, the mandate provides a very needed inflow of patients who were previously uninsured,” Stovall said.

  • Health Care Select Sector SPDR Fund (NYSEArca: XLV)
  • iShares Nasdaq Biotechnology Index Fund (NYSEArca: IBB)

Gold could also see more safe-haven demand on additional quantitative easing measures that would devalue the dollar. [Gold ETFs Jump as Investors Anticipate QE3]

“Gold would do better for all the wrong reasons,” Stovall added. “It would benefit from a lack of confidence in Obama’s economic turnaround and an expectation that the economy will need additional stimulus.”

  • SPDR Gold Trust (NYSEArca: GLD)
  • iShares Gold Trust (NYSEArca: IAU)

If Romney manages to secure a win, dividend-paying stocks would likely do better because Romney plans to hold dividend taxes at the maximum 15%, instead of allowing the Bush-era tax cuts expire. [Dividend ETFs, the Fiscal Cliff and Potential Tax Hikes]

  • Vanguard Dividend Appreciation ETF (NYSEArca: VIG)
  • iShares Dow Jones Select Dividend Index Fund (NYSEArca: DVY)

Romney would also relax the government’s control over domestic oil and natural gas producers. Specifically, he would remove roadblocks to hydraulic fracturing and allow drilling on federal land and off the East Coast.

  • SPDR S&P Oil & Gas Exploration & Production ETF (NYSEArca: XOP)
  • iShares Dow Jones US Oil & Gas Exploration & Production Index Fund (NYSEArca: IEO)

Lastly, Romney could also curb restrictions imposed on the financial industry by the Dodd-Frank Act.

  • Financial Select Sector SPDR Fund (NYSEArca: XLF)

For more information on sector ETFs, visit our sector ETFs category.

Max Chen contributed to this article.

Full disclosure: Tom Lydon’s clients own SPY and GLD.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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