Why the ‘Sell Rosh Hashanah, Buy Yom Kippur’ trade is a tough call as the stock market expands.

It may seem arbitrary to take investment advice from old market sayings, but there is one market strategy that is commonly mentioned before the Jewish holidays – “Sell Rosh Hashanah, buy Yom Kippur.

This year, Rosh Hashanah, the beginning of the year according to the traditional Jewish calendar, begins at sundown on Sunday, September 25. It will last until the evening of Tuesday, September 27. Meanwhile Yom Kippur or the day. Atonement begins 10 days later on Tuesday, October 4th.

“The thesis is that people sell positions on Rosh Hashanah, the first of the Days of Awe, to relieve themselves of financial commitments and then return to the market after the Yom Kippur Day of Atonement,” said Jeff Hirsch, editor of The Stock Trader’s Almanac. , on a note on Friday. “It is no coincidence that this coincides with the seasonal weakness of September/October.”

The US stock market extended its losses on Friday with the S&P 500 SPX.
and the Dow Jones Industrial Average DJIA,
Trading below the 2022 daily low was reached in June. According to Hirsch, merchants may be a little late this year to follow the usual market strategy of selling on Rosh Hashanah, but the opportunity to buy on Yom Kippur is already there.

According to The Stock Trader’s Almanac, the Dow Jones Industrial Average fell 29 out of 52 over the Rosh Hashanah holiday, down an average of 0.5 percent.

watch out The S&P 500 closed below June lows and the Dow is on track to enter a bear market.

“From inflation, to a hawkish Fed, to a bellicose Russia, to global turmoil, the many fears of US midterm politics are exacerbating the usual seasonal and 4-year cycle carnage,” Hirsch wrote.

Hirsch explained in a follow-up phone interview with MarketWatch that it’s seasonal activity and quarterly activity for large institutions, making September the worst month for stocks and the week after the “Three Witches” for futures. Options are “Too Bad”, and October is “This Bear Killer While We Stay in the Almanac”.

The “Triple Witch” is a quarterly phenomenon that marks the simultaneous expiration of three different types of derivative contracts – stock index futures, stock index options, and stock options. Occurs on the third Friday of the third month of each quarter.

The Federal Reserve on Wednesday announced its third major rate hike of 75 basis points to cool inflation, again warning that its work is not done.

US stocks ended the week sharply lower, with the Dow closing nearly 500 points, narrowly avoiding its lowest close of the year. The S&P 500 was down 1.7% and the Nasdaq was down 1.8%. For the week, the large-cap index lost 4.7%, the Dow lost 4% and the Nasdaq posted a weekly decline of 5.1%, according to Dow Jones Market Data.

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