It’s an exciting time of year… to be an investor.
Not only are we weeks away from the major holidays, but Thanksgiving is upon us.
And that’s big news for smart investors.
Since the end of World War II in 1945, stocks have typically shown above-average momentum over the Thanksgiving holiday about 75% of the time.
In fact, the Wednesday before the holiday and the Friday following have shown higher gains than your normal Wednesday and Friday.
And this year looks to be no different as the major indices – the S&P 500, NASDAQ and Dow Jones Industrials – rally to new all-time highs.
Granted, some of the latest rally is from relief the election is over, and hopes OPEC can come to an agreement next week, but some of that gain is from the Thanksgiving Effect.
Even in the worst of years, the effect can be seen.
During the subprime chaos of 2008, the Dow Jones still gained 4% between the Wednesday prior and the Friday following the holiday.
Analysts suggest a variety of reasons for the seasonal strength.
One, it’s one of the heaviest travel weeks of the year with millions of people traveling, filling up their cars with gas, or flying home.
Airline stocks are up an average of 16.6% over the last week.
Even UPS just soared from $106 to $115. FedEx (FDX) jumped from $172.50 to $189 -thanks in part to mailed gifts and luggage.
Two, November is historically a stronger month for stocks after investors move past the historically poor returns of September and October.
Three, investors are excited for Black Friday and Cyber Monday, as more than 47% of consumers are expected to shop online this year.
According to Adobe Digital Insights, online holiday shopping sales will jump 11% to $91.6 billion between November 1 and December 31, 2016. Black Friday sales are also expected to jump 11% to $3 billion, as Cyber Monday sales grow about 9.4% to $3.4 billion.
JP Morgan expects a 17% jump in holiday sales, too.
Of the big cap names, Amazon.com will be a significant beneficiary, with some analysts pegging its share of the U.S. commerce market as high as 35% to 40%.
It shouldn’t come as a surprise that stocks are rallying this time of year. There’s plenty to be thankful for, including being thankful for you and your support for Stealth Stock Trader.
To you and your families this holiday season, be well. Have a very happy, healthy and profitable holiday. We wish you all the very best.
Cheers to another great year of profitable returns.