Stock market turkey trot

11/26/19
  • Stock market has exhibited certain tendencies around Thanksgiving
  • Strongest tendencies: Day before holiday and the two days after it
  • Day after Thanksgiving is a shortened trading session

For the past 55 years, the stock market has often followed a fairly unique pattern around Thanksgiving: The S&P 500 (SPX) has tended to close higher the day before and after the holiday, and closed lower the following Monday:

Chart 1: S&P 500 (SPX) avg. daily returns (1964–2018). Before and after Thanksgiving.

Source (data): Power E*TRADE


The chart above shows the SPX’s average performance for the three days before and after Thanksgiving from 1964–2018. The top half of the chart shows each day’s average return, and the bottom half shows the percentage of times each of these days closed up:

The big takeaways come from the day before the holiday and the first two days after it:

●The SPX closed up the day before Thanksgiving 43 out of 55 years (78% of the time).

●The SPX closed up the day after Thanksgiving in 38 years (69% of the time).

●The SPX closed down two days after Thanksgiving (Monday) in 35 years (64% of the time).1

Those are all pretty exceptional numbers, given that the SPX’s long-term odds of an up day are slightly less than 53%.

Of course, there can be plenty of wiggle room from year to year. Last year, for example, the market didn’t follow the script too closely—the SPX fell the day after Thanksgiving (day 1) and rallied the Monday after it (day 2):

Chart 2: S&P 500 (SPX), 11/16/18 – 11/28/18. S&P 500 (SPX) price chart. Thanksgiving 2018.

Source: Power E*TRADE


But “micro–seasonal” tendencies with long track records are worth watching. Traders often follow patterns around market holidays—they may need extra time off, or adjust positions they don’t want to have to watch during their down time, for example—which can sometimes result in the stock market exhibiting patterns of its own.

Today’s numbers: International Trade in Goods (8:30 a.m.), Retail Inventories (8:30 a.m.), Wholesale Inventories (8:30 a.m.), S&P Corelogic Case-Shiller HPI (9 a.m.), FHFA House Price Index (9:00 a.m.), New Home Sales (10 a.m.), Consumer Confidence (10 a.m.).

Today’s earnings: Abercrombie & Fitch (ANF), Autodesk (ADSK), Burlington Stores (BURL), Cracker Barrel (CBRL), Best Buy Co (BBY), Dell Technologies (DELL), Dollar Tree (DLTR), Dick's Sporting Goods (DKS), VMware (VMW), Keysight Technologies (KEYS), Veeva Systems (VEEV).

 

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1 Based on S&P 500 daily data from 11/1/64–11/30/18. Supporting document available upon request.

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