Monday, November 19, 2012

Trading Thanksgiving Week

According to Jeffrey Hirsch the best short-term trade strategy is to buy on Monday or Tuesday weakness and sell at least half into the Wednesday strength and get out on Friday of Thanksgiving week.  

Monday is usually weak (Dow Jones down 33 of last 60 years), but it’s getting better and better till Friday. Tuesday was up 35 of last 60. Wednesday is the most bullish day (up 44 of last 60) since 1952, and 8 since 2002. On average Friday is as good as Wednesday but was not so good recently since 2006. 

Applying this strategy in 2010 and 2011 resulted in net losses. This year there's a major deadline looming for the Super Committee to agree on a deficit reduction proposal by November 23rd. Failure to reach an agreement could have a major market impact that could buck any seasonal trend. See also HERE