In This Article:
Recent market sell-offs (^DJI, ^IXIC, ^GSPC) and volatility trends — tied to seasonality — have pushed traders to throw out their old investing playbooks and come up with a new strategy.
Yahoo Finance Markets and Data Editor and Stocks in Translation host Jared Blikre examines the best returns from the S&P 500 (^GSPC) for each day of the week and trading periods, dating back to October 2022 lows.
Twice a week, Stocks In Translation cuts through the market mayhem, noisy numbers and hyperbole to give you the information you need to make the right trade for your portfolio. You can find more episodes here, or watch on your favorite streaming service.
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
Recent market action points toward the need for a new playbook when it comes to the best days and times to trade in stocks. But for passive investors, maybe we have some good news. I'm Jared Blikre, host of Stocks in Translation, and let's take a look at some of the best times to trade, and we're going to start with the concept of seasonality, which I've defined before. But these are recurring patterns in the market that tend to happen in calendar years, but they can also happen each day in the market. So, we're going to look at weekday seasonality, and specifically how it has evolved over this two-and-a-half-year bull market. So, this goes back to October of 2022, and I'm going to break down if you had only been invested in the market on Mondays, or Tuesdays, Wednesday, Thursday, Friday, uh, that's going to show you this total here, and this is in spy points, and by the way, this is as of last Friday. So, um, let's take a look at Monday here. Monday has been by and large bullish, but recently, and this is coincidence with the downturn that we've seen in the general market, it has been, uh, fairly bad for markets. Now, yesterday was an exception, and I think that's notable, too. But it's important to notice these big changes in character for the market. So, that's Monday. Let's take a look at Tuesday. Tuesday has been kind of flat recently, but you can see it's been worth 24 net spy points since October of 2022. But what you can also see here is the trend over the last few Tuesdays has been to the downside. And today we're also going down, and so it'd be interesting to see if, by the close, we're able to buck that downtrend similar to how we were Monday. Now, we want to take a look at Wednesdays, as well. Wednesdays are actually negative over this entire bull market. Part of that has to do with the fact that Wednesday, that has Fed days. And guess what tomorrow is? It's Fed day. Back in December, we had this big negative reaction to a surprisingly hawkish Fed, uh, surprisingly hawkish J. Powell. And we'll have to see what happens tomorrow, uh, but that could also be a factor in the market, and that's going to be a big one for these Wednesdays. Now, Thursdays have been heading down recently, as well. Helped in no part by CPI. That was a disappointment last week. And here we can see Thursdays and Mondays. That's what I'm circling here, the orange and the white. Those have kind of traded down over the last few weeks together. Now, it'll also be interesting to see if Thursday, when we finally have that first big reaction after all the Fed news is known, uh, what happens, and are we able to buck these bearish trends? Finally, Fridays have actually been positive recently, and we can see they've turned up over the last three weeks. They have been helped by non-farm payrolls, the monthly job reports. And so that has been a boon to the markets. And, in fact, you can see that Fridays have been the best day to be in the market, uh, with 91.41 spy points there. Now, I've also broken this down in terms of times of day. And so I broke in the intraday action, 9:30 to 4:00 p.m., into three different parts, and then we have the entire overnight portion, and that's in orange here. And what you can see, and this goes back to 2022, as well, that the gap, the overnight action has been by far and away the biggest contributor to the stock market gains. And that's simply because the stock market is only open six and a half hours a day. That means it's closed 17 and a half hours a day, and that's when a lot of news comes into the market. So, what's been suffering recently is the overnight market, but not in a big way. And also, I would add that the 9:30 to 11:00 a.m., that early trading action that we've seen, we see some big reversals, and, uh, that has been bearish overall for the market direction. So you put it together, and I did say there's some positive news for passive investors here. The good news is is that if we were in the midst of a bear market, if we were seeing capitulation selling, we would see a lot more distress in the overnight gap. People coming in Monday would be selling off, and we'd be selling off Tuesday, Wednesday, as well, perhaps. And we'd also see a lot more selling in the intraday timeframe. So put it all together, the market is in a potential place for a rebound here. Maybe this is going to be day three of that, but a little bit of wait and see here. So tune into Stocks in Translation for more jargon-busting deep dives, new episodes on Thursdays and Tuesdays, on the Yahoo Finance website, or wherever you find your podcast.