There are a few names that could ignite some movement next week for the S&P 500
Subscribers to Chart of the Week received this commentary on Sunday, Nov. 23.
With stocks fresh off a volatile five days that resulted in steep weekly losses across the board, the incoming holiday-shortened Thanksgiving week will be a welcome distraction for investors, with a full slate of economic data on the docket. The S&P 500 Index (SPX) shed almost 2% last week, leaving plenty of room for improvement. A boost seems likely, too, as Thanksgiving tends to be a historically bullish week for the benchmark. Add in an inflation release in the form of the producer price index (PPI) on Wednesday and investors will undoubtedly be paying attention.
Giving us a wider look at the SPX’s historic weekly performance, Schaeffer’s Senior Quantitative Analyst Rocky White pulled data from the past 50 years. Compared to all 2,655 weekly returns during this time frame, Thanksgiving week tended to outperform by a notable margin, logging a median return of 0.8%, compared to all weeks’ 0.3%. The benchmark tended to finish positive more often, too, with a 70% win-rate versus 57% overall. With the SPX just off its worst weekly performance since early October, a surge of this magnitude would be welcomed with open arms.
The next two tables show how each day has panned out during Thanksgiving week. All four trading days have been better than usual, as measured by average return. During Thanksgiving week, Wednesday historically had the highest return, though pre-Turkey Trot enthusiasm is unlikely the driving force. Rendering an average 0.3% for the session, 74% of these returns were positive, making the day before Thanksgiving irresistible for bull traders.
For all other weeks over the past five decades (excluding Thursdays), the average return didn’t go above 0.07%, a less-than-ideal move for those looking to garner some profit outside of Thanksgiving week. Further, each of the four days only bring in around a 50% win rate, making these modest gains more akin to flipping a coin than betting big.
While earnings season has mostly wound down, there are a few names that could ignite some movement next week for the S&P 500. EV giants Li Auto (LI) and Nio (NIO) are on the docket, while Dell Technologies (DELL), HP (HPQ), NetApp (NTAP), and Workday (WDAY) leave room for more AI and tech sector whiplash to enter scene. However, rolling out the final week of November brings a closer look at the future of rate cuts, which is likely to sway some anticipatory sentiment and potential winds for the broader market. If the above holds any indication of next week’s performance, however, S&P 500 bulls better start their engines.