Some Days Really are Worse than Others; Part III

  • SumoMe

In two articles (here and here) I tried to point out that there might be a way to know in advance if you are about to have a “bad day” – at least in the stock market.  Here I want to summarize everything in chart and one table.

First a recap.

The Bad Days

For our purposes we will count the first trading day of the month as TDM 1, the second as TDM 2 and so on.

We will also count backwards from the last trading day of the month as follows: The last trading day of the month is TDM -1, the next to last day is TDM -2 and so on.

Here are the “Bad Days” of the month:

*TDM 13 through TDM 16

*TDM -10 through TDM -5

For this piece I used daily price data for the Dow Jones Industrials Average starting on 12/31/1933 and for each calendar month I calculated the cumulative price gain or loss for the Dow:

a) On the “Bad Days” listed above

b) All other trading days of the month

The Results

In a nutshell, for every single month except August and December:

*The “Bad Days” lost money

*”All other days” made money

*For the month of August both periods lost money.

*For the month of December both periods made money.

Figure 1 summarizes everything starting on January 1st 1934

*The Column labeled “Bad Days” displays the cumulative price gain or loss or the Dow Jones Industrials Average by month ONLY during the “Bad Days” listed above.

*The Column labeled “All Other Days” displays the cumulative price gain or loss or the Dow Jones Industrials Average by month ONLY during all trading days of the month that DO NOT fit into the “Bad Days” listed above.

Month All Other Days

Cumulative % +(-)

Bad Days

Cumulative % +(-)

Jan +136.0% (-23.8%)
Feb +25.1% (-12.8%)
Mar +60.7% (-3.7%)
Apr +235.1% (-1.1%)
May +50.7% (-38.8%)
Jun +68.3% (-27.5%)
Jul +250.0% (-14.3%)
Aug (-6.1%) (-17.0%)
Sep +5.5% (-41.7%)
Oct +170.3% (-36.8%)
Nov +147.7% (-12.8%)
Dec +158.3% +50.7%

Figure 1 – Cumulative Monthly % +(-) for Dow on “Bad Days” versus all other days; 12/31/1933-10/31/2017

Figure 2 displays graphically the gain/loss per month during the “Bad Days”.  Note that December is the ONLY month to show a cumulative gain during these days.BaddaysFigure 2 – Dow %+/- by month ONLY during “Bad Days”

Figure 3 displays graphically the gain/loss per month during “All Other Days”.  Note that August is the ONLY month to show a cumulative loss during these days.nonbaddaysFigure 3 – Dow %+/- by month ONLY during “Bad Days”

Summary

So is it worthwhile to trade out of the market on the “Bad Days” and to be back in the market on “All Other Days”?  That’s not for me to say.  But 83+ years of market history makes a compelling case.

Have a Good Day (or not, you know, depending…)

Jay Kaeppel

Disclaimer:  The data presented herein were obtained from various third-party sources.  While I believe the data to be reliable, no representation is made as to, and no responsibility, warranty or liability is accepted for the accuracy or completeness of such information.  The information, opinions and ideas expressed herein are for informational and educational purposes only and do not constitute and should not be construed as investment advice, an advertisement or offering of investment advisory services, or an offer to sell or a solicitation to buy any security.

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