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Wednesday, November 22, 2017 9:02:44 AM
Black Friday shopping won’t signal the stock market’s December path
By: Mark Hulbert | November 22, 2017
Stock market in December often does the opposite as it does right after Thanksgiving and on Cyber Monday
CHAPEL HILL, N.C. — This week’s best investment advice: Ignore the initial reports on how well or poorly retailers are faring.
That’s because those initial reports at best are worthless as a guide to how retailers, and the stock market as a whole, will do from now until the end of the year. And they may even be worse than worthless, as the stock market in December often moves in the opposite direction to how it does right after Thanksgiving.
Consider what I found when comparing the Dow Jones Industrial Average’s DJIA, +0.69% performance on the Friday after Thanksgiving—aka Black Friday—with its return from then until the end of the year. This chart shows what my PC’s statistical program spit out; it reflects data back to the mid-1970s, which (as far as I have been able to discover) is when the phrase “Black Friday” began to be used to refer to the big shopping day on the Friday after Thanksgiving. (The data for years before 1975 tell the same story, by the way.)
Notice the inverse correlation in the chart: The Dow gains more after declining on Black Friday than it does after rising.
To be sure, you shouldn’t use this inverse correlation as a trading tool. That’s because it is not significant at the 95% confidence level that statisticians typically use to determine if a pattern is genuine. The correct investment conclusion to draw is that you learn nothing about the stock market’s performance in December by focusing on its immediate reaction to Black Friday.
Might the insignificance of the Black Friday sales be a function of the growing importance of sales on the Saturday and Monday following Thanksgiving—so-called Small Business Saturday and Cyber Monday? I don’t think so. The inverse correlation I found when focusing just on Black Friday also emerged when I related the stock market’s performance on both that day and the following Monday with how it did thereafter until the end of the year.
This is all good news: It means that you can savor your Thanksgiving dinner, watch football games to your heart’s content and enjoy hanging out with friends and family, all without needing to pay any attention to the initial sales numbers and how the stock market is reacting.
https://www.marketwatch.com/story/black-friday-shopping-wont-signal-the-stock-markets-december-path-2017-11-22
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*** For Market Direction and Trends visit our board:
https://investorshub.advfn.com/Market-Direction-and-Trends-26249/
By: Mark Hulbert | November 22, 2017
Stock market in December often does the opposite as it does right after Thanksgiving and on Cyber Monday
CHAPEL HILL, N.C. — This week’s best investment advice: Ignore the initial reports on how well or poorly retailers are faring.
That’s because those initial reports at best are worthless as a guide to how retailers, and the stock market as a whole, will do from now until the end of the year. And they may even be worse than worthless, as the stock market in December often moves in the opposite direction to how it does right after Thanksgiving.
Consider what I found when comparing the Dow Jones Industrial Average’s DJIA, +0.69% performance on the Friday after Thanksgiving—aka Black Friday—with its return from then until the end of the year. This chart shows what my PC’s statistical program spit out; it reflects data back to the mid-1970s, which (as far as I have been able to discover) is when the phrase “Black Friday” began to be used to refer to the big shopping day on the Friday after Thanksgiving. (The data for years before 1975 tell the same story, by the way.)
Notice the inverse correlation in the chart: The Dow gains more after declining on Black Friday than it does after rising.
To be sure, you shouldn’t use this inverse correlation as a trading tool. That’s because it is not significant at the 95% confidence level that statisticians typically use to determine if a pattern is genuine. The correct investment conclusion to draw is that you learn nothing about the stock market’s performance in December by focusing on its immediate reaction to Black Friday.
Might the insignificance of the Black Friday sales be a function of the growing importance of sales on the Saturday and Monday following Thanksgiving—so-called Small Business Saturday and Cyber Monday? I don’t think so. The inverse correlation I found when focusing just on Black Friday also emerged when I related the stock market’s performance on both that day and the following Monday with how it did thereafter until the end of the year.
This is all good news: It means that you can savor your Thanksgiving dinner, watch football games to your heart’s content and enjoy hanging out with friends and family, all without needing to pay any attention to the initial sales numbers and how the stock market is reacting.
https://www.marketwatch.com/story/black-friday-shopping-wont-signal-the-stock-markets-december-path-2017-11-22
• DiscoverGold
Click on "In reply to", for Authors past commentaries
****************************************
*** For Market Direction and Trends visit our board:
https://investorshub.advfn.com/Market-Direction-and-Trends-26249/
Information posted to this board is not meant to suggest any specific action, but to point out the technical signs that can help our readers make their own specific decisions. Your Due Dilegence is a must!
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