Thanksgiving week is generally an amazing time for trading smallcap stocks! Last year we had some fantastic trades like $CAMT and $ZOOM. In SuperTrades chatroom we made big bank! And Superman himself made a staggering $163,000 trading CAMT and ZOOM in the week around Thanksgiving last year!
Traditionally there is certain times of year that the markets tend to move upwards, even in a year long prevailing downtrend. Christmas (‘Santa Claus rally’) and Thanksgiving (‘Turkey crack run’) are both notable examples of when stocks in general tend to move upwards with bullish momentum. It is an amazing testament to how the markets are driven by human emotions because according to Investipedia the reason for stocks rising in price during these holiday periods is simply general increased optimism! Studies have shown that the day before and after Thanksgiving often show the most dramatic increase in stock prices. Great if you like to trade on the long side!
A great short-term timing strategy is to buy into any weakness the week of Thanksgiving then sell into any rally that occurs and be mostly out of your position by the Friday of Thanksgiving. This has been a common strategy for traders over the last 35 years! Thats right, except for two years (2009 and 1987) there has been a decent bullish rally at Thanksgiving! So its a pretty reliable assumption that it will occur this year too – hopefully you will be prepared! Usually sellers are not around and the buyers tend to dominate the low volume in stocks around this holiday and others. Another theory suggests that short sellers do not want to get trapped in a stock over the holidays where a combination of positive news and the market being closed could result in them losing on their trades, so they cover before the market closes for the holiday. This creates heavier buying volume than normal hence stock prices tend to rise.
However, it is worth remembering historically the week after Thanksgiving tends to have more bearish price action as the sellers and normal volume resumes.
Good luck trading this holiday season,