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Leveraged Opportunity During Thanksgiving Week

This article was originally published on ETFTrends.com.

Next week is shortened trading week due to the arrival of the Thanksgiving holiday on Thursday, Nov. 22. Markets are closed that day and the Friday, Nov. 23 session is just a half day. Although U.S. markets are open just three and a half days next week, there are some potentially interesting opportunities for aggressive traders to consider.

The Direxion Daily S&P500 Bull 3X ETF (SPXL) and the Direxion Daily S&P 500 Bull 2X ETF (SPUU) could play roles in playing those opportunities. SPXL attempts to deliver triple the daily returns of the S&P 500 while SPUU looks to deliver double the daily returns of that index.

“Thanksgiving week itself tends to be bullish. Over the past 50 years, the S&P 500 Index (SPX) has, on average, gained 0.67% during the week, with 70% of the returns positive. Other weeks have averaged a gain of 0.15%, while ending positive 56% of the time,” according to Schaeffer's Investment Research.

U.S. stocks and ETFs have suffered a blow ahead of the midterm elections, but after all the political hoopla, equities could be in for a smoother ride.

Since 1946, there have been 18 midterm elections, with stocks rising higher 12 months after every single midterm vote, despite the various political party combinations in the White House and Congress, writes Stephen McBride for MarketWatch.

Something To Be Thankful For

Traders considering SPXL and SPUU next week may want to wait until after Monday.

“Historically, Monday of the holiday week has been positive less than half the time. Monday, however, has been bearish other weeks too, with the SPX averaging a daily loss over the past 50 years. Tuesday of Thanksgiving week has been relatively uneventful,” according to Schaeffer's.

Since the mid-20th century, stocks have on average gained 17% in the year after a midterm. The results are even more noteworthy if one is measuring from the yearly midterm lows – from their lows, stocks surged an average 32% over the following 12 months.

“Thanksgiving-week outperformance has been due to the day before Thanksgiving and the day after. The Wednesday before Thanksgiving has been positive 78% of the time, averaging a gain of 0.30%. The day after Thanksgiving has averaged a 0.26% return over the past 50 years, while being positive 70% of the time,” notes Schaeffer's.

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