TAX DAY and the Stock Market
Tax Day in the United States. Many United States residents mark Tax Day as the deadline to file their income tax details to the Internal Revenue Service (IRS). The date is usually on or around April 15. However, this deadline may be extended to accommodate holidays or extreme weather conditions.
The run-up to tax day (April 15) traditionally sees somewhat negative pressure on U.S. equities.
Bad Thursday leads to bad Friday in a down week?
Have you heard the expression that a Friday in a “down week” will lead to selling?
So if the close on Thursday is the lowest for the week, and it is a negative week, we can expect more selling Friday?
Well, ahead of tomorrow, I have taken the liberty to share some of my research with you. It is easy to believe things that are easy to remember, such as “sell in May and Go Away”, but it may also give you a bias which leaves you inflexible to take advantage of a big move.
I have included the last 8 “Thursday Friday combinations. You should be able to very quickly spot a tradeable pattern. If you can’t, let me guide you.
Over the last 8 Fridays (excluding Good Friday), you have had a good trading set up in the Dow index if you attempt to follow direction set after the first 3 or 4 bars. This means you attempt to follow whatever trend sets forth after 30 minutes of trading.
7 out of the last 8 Fridays the market has closed at the extreme for the day, if you can ignore the first 10 minute bar at the open. By extreme I mean it has closed at the high of the day or the low of the day.
Although this sample space is small, it is far more important to go into the trading day, knowing your history, than it is going into the trading day thinking you know what will happen. A negative Thursday in a down week does not guarantee a negative Friday.
I have included Larry Pesaventos video as well.
Have a nice weekend.