Oct

12

I used to be a member of the largest athletic club here in my city. One thing I noticed is that the greatest attendance at the club was unquestionably on Monday. I suspect this was due to the couch potatoes after a long weekend in front of their TV screens watching sports and consuming large quantities of alcohol and trans fat laden foods, venturing out and cramming a weeks workout into an hour and a half. As the week progressed attendance would drop consistently until Friday came when there was but a few diehards left who were working out. If Friday was the last workday before a 3 day weekend forget it the gym looked like a ghost town. Also the peak hours of workout were from 5pm to 7pm. The aerobics classes were completely full and it was elbow to elbow. If you wanted to lift weights you had to share your bench with another. Furthermore, January was the highest attendance month and December the weakest. Naturally the Summer months June to August were thin.

When I was a broker, we did most of our commissions on Monday as much as 60 percent and by Friday noon our work week had effectively ended. Plus most of our commissions were generated in the morning rather than the afternoon.

I see similar phenomenon at work in the U.S. Stock markets. Whereas Monday mornings are the most hectic and Friday afternoon the most benign. 9:30am until 10:45 am are the most active, 12pm to 2:30pm appear to be listless until the lunch bunch returns to balance their books for the day.

I am sure there are fundamental reasons for this. As a speculator and swing trader, I would be very interested in hearing from the list their comments and observations, methods they use to exploit this and perhaps an article or paper that would support this thesis. It would seem to me that timing as to purchases and sales or securities would then be taken into consideration as to when one would consider and consummate them.

One theory in particular is to buy the S&P near the end of the month and hold it for the following 4 trading days. Are there others?

Jeff Sasmor responds:

I use NY Sports club in NY. Trainers there have commented to me that they see a lot of new members in January because of New Year's resolutions. They usually attend for a while then stop coming — they generally have signed up for long-term contracts because they in good faith felt that they would keep going for their own good.

Perhaps daily-ness in the stock market is similarly tied to emotions. Maybe a lot of people sign into their Ameritrade and Schwab accounts on Sunday and place buy and sell orders to execute in a vast swath at 9:30 AM on Monday. This isn't exploitable. Unless you work at one of these brokerages…

But to depend on such patterns could be fallacious as they (in my limited experience) seem to shift, advance, and precess. One doubts that the oft-related scheme of buying near the end of the month and holding a few days is reliable (I am sure someone will tell me I haven't tested this but I think that this has been previously debunked on the spec-list).

There are definitely intra-day patterns, lulls, rushes, and so on but these are of no use to you unless you want to day trade (and Dr. LACK will probably try to talk you out of it).

Getting back to gym-going: at our gym each machine has a little LCD TV hooked up to cable TV. I have found that if I am watching Bloomberg or CNBC (yes, I know) then people will come up to you and ask your opinion of the market. Yep. I have only one answer for them.

Ryan Carlson replies:

A lesson I learned early on at the Merc is that pretty much the only ones trading on Friday afternoons are guys who lost money and are trying to make it back. Anyone that's had a good day is gone by lunch and at either the gym, playing golf or the CME Merc Club drinking. Sure, it applies to most other days as well but especially Fridays.

Perhaps it's easier to gun at other's bad positions on a Friday afternoon but the killer instinct in most is generally gone after 4 1/2 days of trading.


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