Rocky White
3 min read
In This Article:
If you’re looking for a trade for next week’s fourth of July holiday week, this article may inspire some ideas. The table below shows the holiday week has been bullish over the past 50 years. The average return during the week of July 4th for the S&P 500 Index (SPX) was 0.52%, more than double the typical weekly return of 0.20%. Also, eight of the last nine July 4th holiday weeks have been positive, averaging a return of 1.30%.
In the next section, I will break down how stocks performed when the 4th of July lands on a Friday versus other days. Finally, I list the best and worst stocks during the holiday week over the last 10 years which shows one sector you may want to avoid.
The July 4th holiday can land on any day of the week, and this year it will be on a Friday. Does that make a difference in how stocks behave? The table below summarizes the weekly return for the S&P 500 based on which day of the week the exchange holiday lands on. In the 14 times it has been on a Friday, the index averaged a return of 0.44% for the week. That ranks fourth of the five weekdays but then the median return of 0.92% ranks first.
What stands out is that a Friday holiday for the fourth of July has led to the most volatile returns with the highest standard deviation of returns and the largest magnitude of both, the average positive return and the average negative return. The standard deviation of 1.95%, however, is lower than the typical weekly standard deviation for the index of 2.26%, as seen in the table above.
The table below shows the individual July 4th weeks where Friday was the holiday. You can see how the stock market performed each day. Monday to Wednesday have tended to be bullish with Wednesday being the most bullish, averaging a return of 0.27% with 71% of the returns positive. It seems traders tend to sell on Thursday before the long weekend. The S&P 500 averaged a slight loss on Thursday of these weeks with just half of the returns positive.
The table below shows the best performing S&P 500 stocks over the past 10 years during the week of July 4th. Technology companies have performed well. The bolded stocks come from either the ‘software’ or ‘technology hardware’ sector. Some of the biggest tech stocks are on the list including Netflix (NFLX), Amazon.com (AMZN), Alphabet (GOOGL), Apple (AAPL), and Microsoft (MSFT).
This last table is a list of the worst S&P 500 stocks during July 4th week over the past 10 years. Oil stocks dominate this list with 10 of the first 15 stocks coming from this sector. Their prices have recently been driven by news about the Middle East conflicts, Next week, they have a seasonal headwind to deal with.
