Trading around Thanksgiving has a bullish tendency perhaps
buoyed by the “holiday spirit.” First published in the 1987 Stock Trader’s Almanac, the Wednesday before and the Friday
after Thanksgiving combined were up 34 times in 35 years. The only S&P 500 decline
was in 1964.
Subsequently, this trend changed. In the 33 years since
1987, there have been 9 declines and 24 advances. The best short-term trade
appears to be getting long into any weakness on Monday or Tuesday of
Thanksgiving week and selling into any subsequent rally by the end of
Thanksgiving week. But as COVID-19 cases are on the rise again remain nimble as
exogenous events like Greece’s debt crisis in 2011 or 2018’s fourth quarter
rout can cancel Thanksgiving on Wall Street.
Also of note is the change in the yearend rally. Prior to
1987, from the close of trading on the Friday after Thanksgiving to yearend,
the S&P 500 rallied only 20 times in 35 years. As Thanksgiving bullishness
lost steam in 1987, the rally afterwards occurred more frequently. Since 1987, S&P
500 has logged gains in 25 of 33 years from the close on Friday after
Thanksgiving to yearend.