The Little Book of Stock Market Cycles: How to Take Advantage of Time-Proven Market Patterns

Chapter Twelve

Celebrate Good Times

Making the Most of Holiday Trading

Everyone needs a break now and then, even the markets and market-followers. The New York Stock Exchange (NYSE) closes nine times throughout the calendar year to celebrate select holidays, including New Year’s Day, Martin Luther King Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas.

Obviously there are many other holidays and special occasions that people observe while the market remains open. But never fear. In the age of the smart phone, traders and investors can still access market data and make trades. Just don’t let your mother catch you sneaking away to review and trade your investments. Although trading might be distracted during these times, most non-observed (by the NYSE) holidays have little discernable impact on the overall market. The exceptions are the Jewish High Holidays of Rosh Hashanah, Yom Kippur, and Passover—these exhibit influence on the markets, which we’ll discuss later in the chapter.

Santa Claus Comes to Town

You might think we’d start by talking about the New Year holiday, but it’s actually best to begin with the last holiday of the previous year, Christmas. Thanks to the Santa Claus Rally (the seven-trading-day period beginning after Christmas) the days before and after Christmas and New Year’s Day are best for trading, especially tech stocks and small caps. NASDAQ and the Russell 2000 have averaged gains of 3.1 percent ...