How to Take Advantage of the "Thanksgiving Effect"

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It has long been noticed that the broader market tends to rise both before and after Thanksgiving. For reasons we won't explain here, stocks experience a bullish bias as investors head into the holiday, and while they are out shopping immediately afterward.

The fact is, the "most bullish week of the year," as it has been called, is really just two really bullish days: TurkeyDay -1 and TurkeyDay +1. Take a look at these historical returns for the S&P 500 on the days both before and after the market closing on Thanksgiving Day:

If we isolate only those two days, and then compare the different major averages, we an interesting development: the Nasdaq really outshines the others. Take a look:

And if we drill down a bit deeper, we discover that, of all the S&P stocks, there are really only a handful where this calendar bias is most consistently seen: travel stocks and retail stocks.

Here are the top 4 Travel Industry stocks for this 2-day Thanksgiving trade:

And here are your top 3 Retail Industry stocks for the same 2-day period:

So now you know the playbook for this week:

  • Buy QLD (2x Bull Nasdaq 100 ETF)
  • Buy HA, JBLU and EXPE
  • Buy JWN, COH and MAT

Buy today and sell at Frideay's close for a nice 2-day gain!

Happy Thanksgiving, everyone! Blessings, TC

Posted to Dr. Stoxx Options Letter on Nov 25, 2015 — 11:11 AM
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