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Twas the day before Thanksgiving...

Jay Kaeppel
2021-11-23
The trading days around Thanksgiving have demonstrated a favorable tendency over many decades. In this piece, we take a closer look at the results.

Key Points

  • The trading day before and the trading day after Thanksgiving have demonstrated a favorable tendency over the years
  • Short-term traders may be able to take advantage of this "edge" 

The day before Thanksgiving

The chart below displays the cumulative % gain for the S&P 500 Index held long ONLY on the trading day just BEFORE Thanksgiving (for the record, this implies buying at the close on Tuesday of Thanksgiving week and selling at the close the next day).

The day after Thanksgiving

The chart below displays the cumulative % gain for the S&P 500 Index held long ONLY on the trading day just AFTER Thanksgiving (for the record, this implies buying at the close on Wednesday of Thanksgiving week and selling at the close on Friday).

The day before AND after Thanksgiving

The chart below displays the cumulative % gain for the S&P 500 Index held long ONLY on the trading day just BEFORE AND AFTER Thanksgiving (for the record, this implies buying at the close on Tuesday of Thanksgiving week and selling at the close on Friday).

Analyzing results

The chart below displays the year-by-year % gain or loss for the S&P 500 Index held long ONLY on the trading day just BEFORE AND AFTER Thanksgiving.

The table below displays the particulars.

What the research tells us…

  • The stock market has demonstrated a strong tendency to rally during the days just around Thanksgiving
  • That said, results in recent years have not been as uniformly favorable as in prior years
  • The strategy above can be traded with any standard or leveraged ETF or mutual fund (as long as there are no switching restrictions) that tracks the S&P 500 Index.

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Risk Disclosure: Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Hypothetical Performance Disclosure: Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.

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