The sinking stock market could be forecasting the results of the November presidential election— or vice versa. Stocks will behave differently after Nov. 4, depending on who wins. TIP SHEET’S Linda Stern asked Jeffrey Hirsch, editor of the Stock Trader’s Almanac, to read the tea leaves.

STERN: What does the year-to-date performance of the stock market predict about the election’s outcome?
HIRSCH: This is a stock market that was in trouble, even before last week’s sell-offs, and the malaise we’ve been experiencing makes the ouster of the incumbent party more likely. Strong Septembers and Octobers usually lead to an incumbent-party win. You would think despite the closeness of the polls that we still are going to see Democrats retake the White House.

Given all that you know about election-year patterns, how would you expect stocks to perform through the election and for the rest of the year?
Election years are traditionally up years. Incumbent administrations shamelessly attempt to massage the economy so voters will keep them in power. But sometimes overpowering events occur and the market crumbles, as it did last week. The bailing-out was too little, too late, and I think we’re going to continue to have market weakness through October. Once we have the settlement on the election, the market would be more inclined to be happy.

How do you expect stocks to respond to an Obama victory and a McCain victory?
The initial response from an emotional standpoint would be positive for an Obama victory and negative for a McCain victory. But that might not last.

What about next year?
This is going to be a very difficult 2009 for whoever is in the White House because of everything that has to be dealt with: war, the economy, the infrastructure, stock markets. Whoever it is, it will be rough. In terms of the stock market, Republican administrations do worse in the first year and Democrats do worse in the second year. They both do better in the final two years of the presidential cycle.

In general, do Democratic or Republican administrations produce better stock markets?
Contrary to conventional wisdom, the market has not done as well under the Republican presidents as Democratic presidents. However, under Republican Congresses they have done better. The best combination for the stock market is a Democratic president and a Republican Congress. Whatever happens in the White House, it’s likely that Congress will be Democrat, and that’s another reason to expect weakness next year.

Will different sectors do better under one or the other?
With Obama, I would expect alternative energy might get a little boost, and maybe some biotech, too, with the releasing of the conservative anti-stem-cell-research mentality. I think there might be a little bit more oil and defense with McCain in office.

Is Election Day itself a stock-market winner or loser?
It’s pretty neutral, but the day after is often bullish.