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%


What do we take from this?

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.


And how long do we hold?

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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