Thanksgiving Week tends to be bullish for stocks
Thanksgiving is next week, and you can probably expect low volumes during the holiday-shortened trading. Markets are closed on Thursday and open for half a day on Friday, closing at 2 p.m. E.T. To prep for this unique week, I broke down how markets have performed during the week, and which stocks have stood out over the holiday.
Overall, Thanksgiving week has tended to be bullish. Over the past 50 years, the S&P 500 Index (SPX) has gained on average 0.64% during the week, with 70% of the returns positive. Other weeks average a gain of 0.17% and positive 56% of the time.
The tables below break down Thanksgiving week by day. Monday has been negative more often than positive but has still averaged a bullish return of 0.15%. The day before Thanksgiving has been a driver of the week’s outperformance. Wednesday of Thanksgiving week has been positive 76% of the time, averaging a return of 0.27%. Also notable, other than Monday, the other days of Thanksgiving week have seen significantly less volatility than normal.
I thought SPY options returns were interesting. We have the data since 2017; the SPX exchange-traded fund (ETF) SPDR S&P 500 ETF Trust (SPY) has tended to move more than option markets have predicted over the past seven years. Buying a call option on the Friday before Thanksgiving and closing it at intrinsic value the following Friday would have yielded a return of 53% per trade.
Despite only two of the seven years having a negative SPY return, purchasing a put option each year for the holiday week would have also led to a positive average return of 6% per trade. The two positive put returns of 312% and 231% were enough to make up for the total losses for the at-the-money options for the other five years.
A straddle (purchasing an at-the-money call and put) would have been the least risky way to play this. The worst outcome for a straddle was a 10% loss in 2023, and the best outcome would have been doubling your money in 2021. Overall, straddles gained 29% per trade during Thanksgiving week since 2017.
Notable Stocks During Thanksgiving Week
Below is a list of individual SPX stocks that have performed the best during the week of Thanksgiving over the past ten years. It’s sorted first by percent positive and then by average return. Three personal care stocks -- new blue chip Kimberly-Clark (KMB), Clorox (CLX) and Church & Dwight (CHD) -- top the list, having been positive every single Thanksgiving week over the past ten years.
Finally, here is the list of stocks which have performed the worst during Thanksgiving week over the past ten years. Energy and utility companies seem overrepresented on this list.
