Memorial Day and the Stock Market
The market will be closed on 05/31 for Memorial Day. This is a quick look at how the market has fared around this most important of days.
Note: this study is included on our new Monthly Seasonality Map.
Just the (Misleading) Numbers
From 1950, the S&P 500 has risen the day before/after MD 71.7%/50.0% of the time for a median gain of 0.31%/0.01%.
Numbers for the number lovers…
Looking at these long-run averages, it appears that the market is very bullish the day before MD.
But readers know I hate just looking at averages because they don’t tell us how consistent the observation has been or whether it’s waxing or waning, so to answer those questions, in the following chart I’ve assumed a trader was only long the S&P 500 index on either the day before (green) or the day after (red) MD (from the previous close), each year since 1950.
What does the chart tell us?
Prior to the late 1970’s, the day-before MD was very bullish, but since then the observation has flattened out and there appears to be no edge in today’s market.
The day-after MD made a nice run in the late 1990’s, but has never really held a consistent edge.
Combining the two (i.e. long the day before and after MD) would look like…
Again, no tradable edge over the last 20 or so years.
In short, I see the days before and after MD both as neutral seasonality events (and that’s how I’ve called it on the Monthly Seasonality Map).
Happy Trading,
ms
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