Indicator of the Week: The Importance of a Positive YTD

How the S&P 500 Index (SPX) performs around Easter, and what it could mean for 2015

Senior Quantitative Analyst
Apr 1, 2015 at 7:51 AM
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With the markets closed for Good Friday on April 3, it's an apt time to take a look at how stocks have performed around Easter. I'll examine what the market has done on the days surrounding the holiday, and I'll unveil an interesting stat on how the rest of the year pans out depending on the year-to-date return through Easter.

Days Surrounding Easter: Looking at the last 30 years, I summarized the S&P 500 Index (SPX) returns for the Wednesday before Easter (today), the Thursday before Easter, and the Monday after Easter. Today is historically a pretty bearish day, averaging a slight loss and positive less than half the time. However, tomorrow -- the last session before Easter -- is typically a very good day for the markets. It averages a return of 0.45%, and is positive 67% of the time.

When stocks resume trading after the long holiday, we seem to give back some of the gains. The day after Easter averages a loss of 0.18%, and is positive a paltry 37% of the time over the past 30 years. It seems that over the past three decades, a trader could have done pretty well by buying at the end of today and selling at the end of tomorrow.

SPX Daily Returns Around Easter Last 30 Years

The Rest of the Year: The table below is pretty interesting. Apparently, the market's performance on the year up to Easter is pretty important for the rest of the year. When the SPX is positive on the year through Easter, the rest of the year has been positive an impressive 90% of the time, and averages a gain of almost 10%.

Contrast that to when the index is down year-to-date through the holiday. In that case, the index declines an average of 2.88%, and is positive less than half the time.

Currently, the SPX sits just 0.4% above the year-to-date breakeven level of 2,058.90. From the table below, you could conclude it's pretty important for the broad-market barometer to hold this level through the end of the week. But in reality, I doubt a single percentage-point drop over the next couple of days means anything to forecasting the rest of the year.

SPX Rest-of-Year Returns After Easter
 

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