Should You Buy Stocks During Holiday-Shortened Weeks?

Stocks tend to outperform when the day off is on a Friday

Senior Quantitative Analyst
Feb 15, 2023 at 8:42 AM
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Next Monday is President’s Day, which means a short four-day trading week. This week I’m looking at how stocks have historically performed during this holiday and during short trading weeks in general. Finally, I’ll note individual stocks that, for whatever reason, have performed especially well or terrible during the week of President’s Day.

President’s Day Week

President’s Day officially became the third Monday of February starting in 1971. The tables below show this holiday week has been a bad week for the S&P 500 Index (SPX). Since 1971 the week has averaged a slight loss of 0.04%, with exactly half of the returns positive. Since 2000, the week has averaged a bigger loss of 0.24%, with 52% of the returns positive. Also, the S&P 500 has been negative two of the last three years during the week of Presidents Day.

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The table below breaks down the index returns for each day of President's Day week. Tuesday averages a loss of 0.22%, despite over half of the days (52%) being positive. Friday of the holiday week has been notably bullish averaging a gain of 0.28% with over 60% of the returns positive. That’s different than other weeks since 2000 in which Friday is the only day averaging a loss. The middle two days, Wednesday and Thursday have tended to be bad days for stocks, averaging a loss and a less than 40% positive return rate for either day. Based on this, if you’re looking to get into the market, wait until late in the day on Thursday.

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Short Weeks in General

The table below compares full five-day trading weeks to shortened holiday weeks. Since 2000, the S&P 500 has averaged a gain of 0.38% during holiday weeks which is more than six times the average return of 0.06% during full trading weeks. Looking more into it, however, weeks in which Monday is the day off, like next week, do not outperform five-day weeks. The outperformance of holiday weeks has been due to the weeks where Friday is the day off. Let’s look forward to the week of April 7, Good Friday.

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Individual Stocks and President’s Day Week

We learned above that this coming week has historically been a poor one for the S&P 500. There are, however, certain stocks that stand out during the week of President’s Day. Looking over the past 10 years, the first table below shows the S&P 500 stocks that have performed the best. For some reason, electricity stocks are prominent on this list. The second table shows stocks that have performed the worst. I notice several banks on that list.

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