The Stats Man
Monday's seem to be tough for numerous reasons. But whilst we are in isolation and not looking back too fondly on our weekends, there is another reason to not be so chirpy.
Looking at the US stock market for what are the best trading days this year (please note this is a small sample size and therefore can easily be subject to change), the best day for trading is Tuesday. The worst, Monday. The difference between days is significant. Therefore the Monday close price should correlate with buying stocks, and the US Tuesday close correlates with closing out positions.
The second worst day is Thursday, so the same would apply.
So let's look at the ASX:
| XJO | Previous Close to Close | Previous Close to High | Open To Close |
| Average | Average | Average | |
| Monday | -2.28% | -0.37% | -1.87% |
| Tuesday | 1.14% | 1.50% | 1.21% |
| Wednesday | -0.45% | 0.84% | -0.54% |
| Thursday | -0.55% | 0.95% | -0.65% |
| Friday | 0.05% | 1.07% | 0.15% |
That Monday’s are often horrible, and we should look to enter new positions on the close that day. If we are looking to take profits, Tuesday’s afternoon or Friday during the day are our best options. Again, this is a small sample size and only looks at the broader ASX200 for just 2020. If we analyse the data over a larger sample size (100 years), the effect is nullified. Maybe historically Monday'itis wasn't a thing.
A much longer term of thought, but if you look at large sell offs and their rallies;
Interestingly, on the back of super strong US days (defined as Dow Jones trading intraday +10%), the 12, 24 and 60month returns after that are all positive since 1932. These 10% positive days were interestingly during the market crashes in 1932, 1933, 1987, 2008 twice and now (24th of March 2020).
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Disclaimer:
Barclay Pearce Capital Management Pty Ltd is the holder of an Australian Financial Services Licence (Number: 503261). The information provided on this website is general in nature only and does not constitute personal advice. The information has been prepared without taking into account you or your company’s objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs. You should seek independent financial advice and read the relevant disclosure statements or other offer documents prior to making an investment decision about a financial product. The material contained on the website is for information purposes only and should not be construed as an offer or solicitation or recommendation to buy or sell financial products.
Barclay Pearce Capital acknowledges the Traditional Owners of the land where we work and live, the Gadigal of the Eora Nation and pays our respects to Elders past, present and to the children of today who are the Elders of the future. We celebrate the stories, culture and traditions of Aboriginal and Torres Strait Islander Elders of all communities who also work and live on this land.