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Performance on Mondays & Fridays Key to Bull Market Survival

So far this year, Wednesday is the best performing day of the week for S&P 500, advancing 11 out of 15 times. We do not apply a great deal of weight to this accomplishment as research in the Stock Trader’s Almanac (STA) has repeatedly demonstrated that the beginning and ends of days, weeks, months and years tend to hold greater significance and Wednesday is nearly always the third trading day of the week, unless Monday was a holiday. 

On page 143 of STA 2017 the 23 bears years – 1953, ’56, ’57, ’60, ’62, ’66, ’69, ’70, ’73, ’74, ’77, ’78, ’81, ’84, ’87, ’90, ’94, 2000, 2001, 2002, 2008, 2011 and 2015 are separated from 42 bull market years. [Editor’s note: Ned Davis definitions of bull and bear market are used in the Almanac. A cyclical bull market requires a 30% rise in the DJIA after 50 calendar days or a 13% rise after 155 calendar days. Reversals of 30% in the Value Line Geometric Index since 1965 also qualify. A cyclical bear market requires a 30% drop in the DJIA after 50 calendar days or a 13% decline after 145 calendar days. Reversals in the Value Line Geometric Index also qualify. Bull and bear markets are measured at peak and trough dates, so both the time and price criteria must be met as of the peak and trough dates. Using this criterion, the majority of 2015 was a bear market.

While Tuesday and Thursday did not vary much between bull and bear years, Mondays and Fridays were sharply affected. There was a swing of 10.1 percentage points in Monday’s and 9.5 in Friday’s performance. When traders and investors are reluctant to hold positions over the weekend and fail to buy on the first trading day of the week, they are showing a lack of confidence. Since mid-March, Fridays (or the last trading day of week) have been poor, and Mondays (or first trading day of the week) have been weak. Improving market performance on Fridays and Mondays would confirm this bull still has legs while the opposite would suggest a rising probability of trouble ahead.