Investment Warrior Report Archive Article

Daily Market Bias

Does the stock market have a bias to certain days of the week, and if so, why? Here is a look at market action based on a "day of the week" basis. Even on an hourly view, the market has certain times of day that are more profitable than other times of the trading day.

Using historical results dating from 1928 forward , on the average market day...

Mondays are down 0.18% Tuesdays up 0.05% Wednesdays up 0.10%Thursdays up 0.055% Fridays up 0.13%

A theoretical reason for this market movement is that people tend to buy stock more on Fridays as this is a payday, and a day filled with positive expectation because of the coming weekend. The opposite is proposed for the downturns on the historic "Blue Mondays". Although markets are very efficient in general, market participants do exhibit and manifest their emotional "moods" in investment decisions!

On an hourly basis, both the first and last hours of the market day are the most profitable. On Tuesdays through Friday there is an average movement of +0.10% in the first hour of trading and an average movement of +0.12% in the last hour of trading. On all market days, the second and third hours of trading are historically negative with an average drop of -0.05%. Mondays historically open lower and stay lower all day until a slight turnaround in the last half- hour of trading. In fact all market days have shown a tendency to trend higher in the last half-hour of trading.

Although the market movements listed here are very small, and cannot be used for profitable "day trading" it would be wisdom, even for someone who is a "buy and holder" to at least time his initial regular purchases to enter the market before favorable times. An example of this would be buying on a Tuesday morning, and to time withdrawals in a similar fashion by selling on a Friday close. Those adding to positions within an overall timing model like those used here at Lussenheide Investment Warrior Report can also add to positions by using a similar strategy.



Copyright 2003 Lussenheide Capital Management