Watch This S&P 500 Signal After Black Friday

Several retail stocks tend to outperform the week after Black Friday

Senior Quantitative Analyst
Nov 21, 2018 at 2:01 PM
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It used to be just Black Friday, now there’s Gray Thursday and Cyber Monday and who knows what else. Whatever they name it these days, it’s the unofficial start to the holiday shopping season. Get ready for reports of foot traffic, online and in-store sales numbers, and Walmart fist-fights, all of which will be used to gauge the strength of the consumer and the economy. In other words, it could be a very telling week for stocks. I’m taking a look at past years to see how stocks have behaved in the coming week and if the market’s behavior is any indicator for what to expect going forward.

S&P 500 the Week After Black Friday

Going back to 1990, the week after Black Friday has been bullish for stocks. It averages a 0.53% return for the week, compared to 0.15% for other weeks. The average return after Black Friday outperforms other weeks due to a higher percent positive and an average loss that is lower than other weeks.

IOTW Nov 20 SPX Since 1990

Best Day to Buy Stocks Next Week

Despite the data above, I wouldn’t buy stocks this Friday. The Monday after Black Friday has been terrible. You can see in the table below it averages a loss of 0.32%, with less than 40% of the returns positive. Additionally, Cyber Monday has been a down day for stocks the last six years in a row.

The only day next week that has been exceptionally bullish has been the following Friday, which has been positive almost 80% of the time. It’s also the only day with over half of the returns positive. Basically, the bullish Black Friday week returns are driven by just that one day. Based on this, if you want to buy stocks, wait until Thursday.

IOTW Nov 20 SPX Week After Black Friday

Using the Week After Black Friday as an Indicator

I mentioned above how reports next week will be used to gauge the health of the economy. If this is the case, perhaps next week’s stock market reaction can be some sort of indicator. The table below supports this theory. When next week has been positive, the S&P 500 has averaged a 3.69% return over the next three months. When the week after Black Friday has been negative, it has averaged a loss of more than 1%.

IOTW Nov 20 SPX 3 Months After

Best Retail Stocks Next Week

Below are some of the biggest retailers in the S&P 500 and how they have performed the week after Black Friday over the past 10 years. The table is sorted by percent positive and then by average return.

IOTW Nov 20 SPX Best Retail After Black Friday


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