IS DECEMBER A GOOD TIME TO TRADE STOCKS?
The stock market tends to have strong returns around the end of the year as well as during June to August, while September is traditionally a slow month. Investors always ask what happens with the festival season. So, in terms of seasonality, December has shown to be a good time to buy value shares that may rise early in January and February.
December has historically been the strongest trading month of the year. 2018 saw the S&P 500 drop more than 9% in the December. The market, after months of selling, bottomed on Christmas Eve before staging a 2019 rally that could give stocks their best annual gains.
Certain markets can be affected by having extra days off for holidays like Thanksgiving, Youth day or Christmas. Markets tend to see increased trading activity and higher returns the day before a holiday or a long weekend.
Black Friday is the name given to the day after Thanksgiving, when traditionally, retailers would be “in the black” for the year. Now it signals the biggest day of the important shopping weekend worldwide in November.
Cyber Monday is the Monday after the holiday weekend. Sales during the five-day period of Thanksgiving through Cyber Monday are seen as reflective of consumer sentiment.
An increase in sales during this period can benefit retail sector stocks, particularly the stocks of companies that report strong sales.
However, the overall stock market and broader investor sentiment is not always impacted by the results of Black Friday, with market participants focused on a variety of economic and political developments.
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