Anemic volumes and muted trading activity generally are the two things that first come to mind when investors are asked about the market’s behavior during the week of Thanksgiving. Few would guess correctly that this holiday week has an undeniably bullish bias when considering historical market returns.
Low trading volumes around the holiday shouldn’t come as much of a surprise; after all, this is a shortened trading week, with Friday being a half-day on Wall Street. What is surprising is the overwhelmingly bullish nature of this week amid an otherwise “quiet” period in the markets.
S&P 500 Performance During Thanksgiving Week
Consider the following research from Schaeffer’s about how the broad market, as represented by the S&P 500 Index, has performed during Thanksgiving week.
| Thanksgiving Week | All Weeks | |
|---|---|---|
| No. of Returns | 50 | 2655 |
| Average Return | 0.63% | 0.14% |
| Median Return | 0.66% | 0.26% |
| Percent Positive | 66% | 56% |
| Avg. Positive | 1.58% | 1.58% |
| Avg. Negative | -1.21% | -1.67% |
Key takeaways:
- The average return during Thanksgiving week has been 0.63% vs. the average weekly return of 0.14%.
- This holiday week has seen positive returns two-thirds of the time, with the average positive return being 1.58% vs. the average return of negative 1.21%.
It’s clear Thanksgiving week historically has favored the bulls more than the bears; and while this may be just an arbitrary fact to most investors, it’s a useful point of reference for many nimble traders looking to capitalize on short-term opportunities.
Broad Market ETFs to Play the Thanksgiving Rally
Investors looking to play the broad market during Thanksgiving may opt for one of three ETFs linked to the S&P 500 Index.
Alternatively, investors can “fine-tune” their exposures to the S&P 500 in a number of ways. For instance:
- S&P 500 High Beta Portfolio (SPHB ): This ETF is invested in only 100 of the S&P 500 stocks, and specifically those with highest beta; as such, SPHB can be expected to outperform the broad-based SPY whenever investors are in “risk on” moods.
- S&P Equal Weight ETF (RSP ): This ETF is invested in all 500 stocks from the parent index, but it affords equal weight to each security; as such, RSP can, at times, also be expected to outperform the broad market.
Other Ways to Play: Stock-Heavy ETFs
Single stocks also are prone to big moves during Thanksgiving week, according to Schaeffer’s. An investor may wish to opt for a fund that features meaningful exposure to any of the stocks listed below:
| Ticker | Company Name | Average Return | Median Return | Percent Positive |
|---|---|---|---|---|
| JWN | NORDSTROM | 6.43% | 2.52% | 90% |
| SCSS | SELECT COMFORT | 6.26% | 1.77% | 90% |
| AAPL | APPLE | 4.71% | 4.91% | 90% |
| TIF | TIFFANY | 2.62% | 3.00% | 90% |
| ASNA | ASCENA | 2.62% | 2.22% | 90% |
| CNC | CENTENE | 2.12% | 2.15% | 90% |
| NKE | NIKE | 2.08% | 1.49% | 90% |
| KNDI | KANDI TECHNOLOGIES | 4.31% | 3.50% | 88% |
| SKX | SKECHERS | 5.69% | 3.40% | 80% |
| WSM | WILLIAMS SONOMA | 5.69% | 2.60% | 80% |
| SBAC | SBA COMMUNICATIONS | 5.41% | 1.48% | 80% |
| HOT | STARWOOD HOTELS | 4.77% | 2.85% | 80% |
| MU | MICRON TECH | 4.68% | 3.07% | 80% |
| CBG | CBRE GROUP | 4.41% | 2.49% | 80% |
| CRUS | CIRRUS | 4.25% | 3.62% | 80% |
| AEO | AMERICAN EAGLE OUTFITTERS | 4.23% | 2.35% | 80% |
| DISH | DISH NETWORK | 4.17% | 2.53% | 80% |
| EXPE | EXPEDIA | 4.14% | 2.75% | 80% |
| DLTR | DOLLAR TREE | 3.84% | 1.91% | 80% |
| MW | MEN'S WEARHOUSE | 3.58% | 1.89% | 80% |
| LB | L BRANDS | 3.35% | 2.26% | 80% |
| NWL | NEWELL RUBBERMAID | 3.23% | 0.75% | 80% |
| AMZN | AMAZON.COM | 3.21% | 2.70% | 80% |
| SLW | SILVER WHEATON | 3.20% | 2.37% | 80% |
| ALK | ALASKA AIR GROUP | 3.18% | 1.19% | 80% |
| TGT | TARGET | 3.06% | 0.76% | 80% |
| SWKS | SKYWORKS SOLUTIONS | 2.97% | 4.03% | 80% |
| GOOGL | ALPHABET | 2.95% | 2.20% | 80% |
| TER | TERADYNE | 2.83% | 2.95% | 80% |
Keeping the stocks listed above in mind, some ETFs that warrant closer looks are:
- (IYW ) is the AAPL -heaviest ETF, currently allocating around 19% of total assets to tech giant Apple.
- (RWV ) is the NKE -heaviest ETF, currently allocating around 7% of total assets to apparel king Nike.
- (PBS ) is the DISH -heaviest ETF, currently allocating around 5% of total assets to media provider Dish Network.
- (PEJ ) is the EXPE -heaviest ETF, currently allocating around 5% of total assets to online travel company Expedia.
- (RTH ) is the AMZN -heaviest ETF, currently allocating around 15% of total assets to online retail juggernaut Amazon.com.
To see all the ETFs that may have exposure to any of the stocks listed above, use the free ETFdb Stock Exposure tool – just search for the stock ticker and you’ll see which ETFs hold it, and how much.
The Bottom Line
No matter which approach you choose this Thanksgiving week, be it broad-based or stock-heavy, remember to practice disciplined profit-taking and utilize stop-loss orders, especially if you’re trading leveraged ETFs.
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