Markets will be closed on Monday, January 16 in honor of Martin Luther King Jr. Day.
Holiday seasons and stock trading volume
As both professional and casual traders take time off during the holidays, stock trading volume typically decreases. However, that doesn’t mean there aren’t trade-offs. Stock prices may also be more volatile than usual because there are fewer buyers and sellers to provide liquidity because fewer traders are active in the markets.
This high volatility in stocks can provide opportunities for traders looking to make quick profits during the holidays to take advantage of market fluctuations.
Furthermore, just because the stock market is less active doesn’t mean all is quiet. Following political and economic news during the holidays can help you profit from upcoming market developments as these topics continue to influence stock prices.
The impact of the Martin Luther King Jr. Day holiday on commerce
Martin Luther King Jr. Day It is the first holiday of the year. The third Monday of January is always celebrated as a holiday and the stock market is closed on that day. The holiday can be celebrated already on January 15 and until January 21.
Although Martin Luther King Jr. Day was declared a federal holiday in 1986, it wasn’t until 1998 that exchanges began closing on that day. On average, the market was more bullish on the Friday before Martin Luther King Jr. Day and less bullish on the following Tuesday. According to Dow Jones market data, the S&P 500 (SPX:) and Dow (DJIA:) starting on the trading day before the holiday had an average gain of 0.2% and a loss of 0.2% on the following trading day.
Statistics for MLK week since 1998 are listed for each day of the week in the table below. As you can see, the SPX has a negative average return for three of the four trading sessions of the post-holiday week: Tuesday, Thursday and Friday.
Source: Yahoo Finance
Keep an eye out for the holiday effect this week after Martin Luther King Jr. Day.