Trader’s Narrative

This is a guest post by Wayne Whaley

The markets tend to be in a good mood the week before holidays, since 1950, the S&P 500 is 40-19, up 67.85 of the time during the four day week (including Friday) of Thanksgiving for an average gain of 0.78%

On average, all of those gains come on the two days surrounding Thanksgiving, which are 51-8, up 86.44% for an average gain of 0.80%.

The week after Thanksgiving can be a bit of downer and the markets have a bearish tilt as well, 28-31, up only 47.46% of the time for an average loss of 0.24%

The Turkey trimmings really take their toll on the Monday after Thanksgiving, as it takes the big hit, 24-35, up only 40.68% of the time for an average one day loss of 0.38%.

The last five Monday’s after Thanksgiving have been down, including last year’s (2008) loss of 8.93%.

S&P 500 % Chg for Thanksgiving the Last 20 years:

I couldn’t distinguish a discernible difference in the data in up or down years.

It has been my observation that since these type trading strategies became well documented over the last couple of decades, they tend to be anticipated a day or two. Be careful.