Daily stock tendencies
by L. R. James
Most of us who have done a substantial amount of stock trading would agree that the broad market
does a lot of funny things. In theory, the stock market is a vast, highly efficient mechanism that takes in
information, evaluates it and adjusts its pricing according to its consensus opinion of the future. Over the
longer term, that's basically what it does. However, over shorter periods of time, there are some
interesting quirks in the way the market operates.
One of the more interesting of these departures from efficiency involves changes in stock prices with
respect to the day of the week. Just as some people tend to favor one day over another, so does the stock
market. As shown in Figure 1, from December 23, 1986 to January 11, 1989, stock price changes
occurred according to a pattern in which Tuesdays and Wednesdays tended to give the best performance.
Prices on those two days were up a significantly higher percentage of the time and yielded much better
returns on investment than the two runner-up days, Thursday and Friday.
The laggard, with an already established reputation in the financial media, was Monday. Monday was an
up day less than 50% of the time during the two years and, largely as a result of the crash on Monday,
October 19, 1987, the day had a substantial loss compared to the others.