Indicator of the Week: Martin Luther King, Jr. Day & Short Trading Weeks
By Rocky White, Senior Quantitative Analyst
Foreword: Markets are closed Monday in observance of Martin Luther King, Jr. Day. As I often do, I'm taking a quantitative, historical look at what the market has done over this holiday week. Furthermore, I'll break it down more generally by comparing shortened trading weeks against typical five-day weeks.
Martin Luther King, Jr. Week: Markets began closing for MLK Day in 1998 (although it became a federal holiday in 1986). The first table below shows how the S&P 500 Index (SPX) has performed during the week of MLK Day. Specifically, it shows both Tuesday's return and the return for the entire week. As you can see, there's a lot of red in that table.
The second table below compares the MLK holiday week to other weeks. Historically, this has been a brutal week for the market, with the SPX averaging a loss of 1.10%, and ending higher only 29% of the time.
General Holiday Weeks: Still looking at the SPX since 1998, below is a table that shows how shortened trading weeks have done compared to typical five-day weeks. Despite the generally bearish MLK holiday weeks, the shortened weeks overall tend to outperform other weeks when going by average return (0.34% vs. 0.03%).
This final table breaks down the short trading weeks by the weekday of observance (Monday vs. Friday). The trading weeks with a Friday holiday are very bullish. Unfortunately, we have to wait all the way until April for one of those. Meanwhile, weeks with a Monday holiday are most bearish. However, the underperformance is mostly due to MLK week. Disregarding those 14 weeks, Monday holiday weeks average a return of 0.13%, and are positive 54% of the time.
This Week's Key Events: Blue Chips, Banks in the Earnings Spotlight
Schaeffer's Editorial Staff
Here is a brief list of some of the key events this week. All earnings dates listed below are tentative and subject to change. Please check with each company's respective website for official reporting dates.
The market is closed in observance of Martin Luther King, Jr. Day.
The economic calendar will kick off on Tuesday with the Empire State manufacturing index. Citigroup (C ), Wells Fargo (WFC), TD Ameritrade (AMTD), Forest Laboratories (FRX), McMoRan Exploration (MMR), Cree (CREE), and Linear Technology (LLTC) are expected to announce earnings.
On Wednesday, Wall Street will see the Labor Department's producer price index (PPI) and core PPI, as well as the Fed's monthly report on industrial production and capacity utilization. On the earnings front, we'll hear from Goldman Sachs (GS), US Bancorp (USB), Bank of New York Mellon (BK), State Street (STT), PNC Financial (PNC), eBay (EBAY), F5 Networks (FFIV), and Fastenal (FAST).
The regularly scheduled report on weekly jobless claims will hit the Street on Thursday, as well as the holiday-delayed crude inventories data, the Philly Fed manufacturing index, monthly housing starts and building permits, and December's consumer price index (CPI) and core CPI. Bank of America (BAC), American Express (AXP), IBM Corp. (IBM), Microsoft (MSFT), Intel (INTC), Google (GOOG), Morgan Stanley (MS), Southwest Airlines (LUV), Intuitive Surgical (ISRG), and BlackRock (BLK) will share the earnings spotlight.
The week wraps up with the latest data on existing home sales. Finally, the earnings calendar concludes with the latest quarterly results from General Electric (GE), Fifth Third Bancorp (FITB), Comerica (CMA), Schlumberger (SLB), SunTrust Banks (STI), and Parker Hannifin (PH).
And now a few sectors of note...
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Recent XIV Action May Bode Well for Bulls
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