The Single-Best Trading Week of the Year Starts Now

Long-term investors can sleep through what follows, but tactical investors and traders might want to perk up. That’s because we’re at the start of the single-best trading week of the year for stocks – at least, historically speaking.

Everyone knows that October and November are two of the market’s favorite months. But it just so happens they also contain some short bursts of absolutely tip-top returns, says LPL Financial Chief Market Strategist Ryan Detrick.

Oct. 28 was the longtime champ for single-day performance – that is until it face-planted more than 3% in 2020. As a result, it ceded its reign as king of the day-trading hill to Oct. 27.

But don’t feel too bad for Oct. 28. It’s still a great day for stocks, explains Detrick, as are Oct. 29, Nov. 2 and Nov. 3.

“I’d like to think it has something to do with my birthday being on Oct. 28, but the truth is bulls should be aware that the coming days are historically some of the best of the year,” Detrick says.

Autumn Is a Great Time for Stocks

Indeed, the strategist says the single best day to buy at the close and hold for the next five trading days is today, Oct. 27.

“Yes, these five days were lower last year by 0.6%, but you have to go back to the late 1960s to see the last time they were down two years in a row,” adds Detrick.

Which brings us to November. Since 1950 – and over the past 10 years – it has been the top month for market returns.

“November is the best month of the year, but it doesn’t seem to get nearly as much love as you’d think,” Detrick says. “We all assume December is the best month, but November is actually better and gets very little fanfare. Maybe it should be a month for the bulls, not for turkeys.”

As good as November has been for investors since 1950, it’s actually not that big a deal when we delve much farther into the past. Since 1928, November’s average price change comes to just +0.9%, according to Yardeni Research. That ranks it as only the fifth best month for the S&P 500. 

December – so beloved by investors – has done a better job, but it’s still merely the market’s third best month since 1928. The final month of the year boasts an average price change of +1.3%.

If we’re talking about really long investing horizons – in this case over the past 93 years – the market’s top month is July, hands down. Maybe it’s because the dog days have yet to set in, but everyone’s favorite summer span sports an average price change of +1.6% since 1928. 

It’s not clear why July has historically been so good to the market. Perhaps it just likes to troll those who sell in May.