Studies on the “overnight effect” of US exchanges: the largest returns often arise outside of trading hours. Statistical patterns also show strong daily and monthly effects.
• “Overnight Effect” – night hours are particularly renda -literature according to studies
• Patterns recognizable within the week and long weekends
• November as a historically strongest month
Overnight effect: best time of day for the trade of US shares
As a study by the consulting company Elm Street shows, stocks on the US trade market are tilted to achieve a larger return when the market is closed. The so -called overnight effect does not only exist at index level. It also shows that he “appears in a suggestive pattern in the returns of individual shares and is particularly strong with” Meme “shares,” the study says.
According to the findings of the study, the overnight effect on most major stock markets can be observed and traced back to the 1990s. Nevertheless, a little attention was paid to this phenomenon in the past.
As the FA Center from Marketwatch explains, an analysis of the stock market stated that price gains were mainly achieved outside of regular trading hours. A portfolio that would have been invested exclusively in the night hours would often have shown better development than a portfolio that was only held during the day. While investments had brought losses throughout the day, profits could be made overnight.
Although these results remain hypothetically and do not take into account transaction costs, but it was pointed out that these fees would only reduce the returns achieved moderately.
Another study by Terry Marsh from the University of California, Berkeley, and Fong Chan from the University of Western Australia attributes the so -called overnight effect on market reactions on corporate news that are published outside of trading hours. Extreme profit surprises in particular could lead to price movements that are reflected in the night. Since such messages are usually published in the early morning before the stock exchanges open, a large part of the course adjustments are therefore made overnight.
However, Marketwatch also emphasizes that this strategy focuses on many small effects in the long term and is not a quick way to get away with great wealth.
As Investopedia explains, the trading hours on the US exchanges are characterized by high activity and strong course fluctuations, especially at the beginning and at the end of the day. After opening the stock exchange at 9:30 a.m. Eastern Time, the events and news of the past hours are processed, which often leads to significant movements.
Professional dealers therefore often concentrate on the first hour after the start of the trade, since the largest price exposures are expected during this period. Around noon, volatility and trading volume usually decrease, which is why many day traders close their positions beforehand.
In the last trade lesson, the market activity increases again, since institutional investors and traders adapt their positions and react to new developments. Similar to the morning, this offers opportunities, but with a higher risk.
These are statistically the best days of the week for US trade
According to Investopedia, previous studies also showed that shares tend to perform better on Fridays and poorly perform on Mondays. Even if the reasons behind it – such as the publication of negative news on the weekend or the depressed mood of the investors – are controversial, the phenomenon remains in principle.
An analysis of the S&P 500 closing courses from 2000 until the end of 2024 also showed that Tuesday had an average of the highest daily returns, while the weakest results achieved on Monday and Friday. Wednesday and Thursday were in between. However, the differences are low and usually without practical importance for private investors.
Clear patterns, on the other hand, would show themselves around long weekends: on average before public holidays or extended weekends, the daily returns rose significantly on average, while they declined after the breaks. Long weekends ago, the likelihood of positive trading days was also higher.
Despite these statistical abnormalities, investors should be careful. Commercial costs, tax effects and the practical effort could quickly destroy possible profits, so that a corresponding trade strategy is not worthwhile for most private investors.
The best monthly times to act US shares
An analysis of the S&P 500 data from 2000 to 2024 shows significant seasonal patterns from a month. November stands out as a historically strongest month, followed by April and July. This tendency has also been confirmed in long -term evaluations since 1928, says Investopedia. September, on the other hand, remains true to its reputation as the weakest month.
In addition to September, February and June were particularly weak. The notorious “October effect”, historically connected to stock market crises, has lost horror in the recent past: October now has solid profits, but remains a particularly volatile month.
However, daily fluctuations overlap these monthly effects, so that seasonal patterns for short -term investment strategies are only limited.
Editor finance.net
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