Pre-Holiday Trading Days Bring The Lowest Trading Volume Of The Year

If you look around your workplace today and see a number of empty seats, you’re probably not alone. Lots of Americans take the Friday prior to Memorial Day off to get a head start on the long weekend, and Wall Street is no different.

Trading volume tends to be extremely light in U.S. markets on the day before a holiday. In fact, according to Nasdaq OMX Group, Christmas Eve and the day before Thanksgiving have the lowest trading volumes of the entire year for U.S. stocks.
 

Related Link: Is A June Rate Hike Good News For U.S. Stocks? 

In 2013, the following five trading days were the lowest of the entire year:

1. December 24 (Christmas Eve)- 2.75 billion trading volume
2. November 29 (day after Thanksgiving)- 2.97 billion trading volume
3. July 3 (day before Independence Day)- 3.59 billion trading volume
4. December 26 (day after Christmas)- 3.81 billion trading volume
5. December 27 (two days after Christmas) 4.03 billion trading volume

Fortunately, the light holiday trading volume is more than just a fun fact and can also be a trading opportunity.

“Research shows that market return during pre-holiday days is often more than 10 times larger than the average return during normal trading days,” Quantpedia explains. The site cites research that back-tested the so-called “Pre-Holiday Effect” from 1896 to 2002. 

So far in Friday’s session, the SPDR S&P 500 ETF Trust SPY is up 0.33 percent.

Disclosure: the author holds no position in the stocks mentioned.