Watch For ‘Holiday Buys’

Hey Market Pilot,

The market has a few sayings that help give some guidance as to its seasonality and behavior. Arguably, the most commonly known ones are “sell in May and go away,” “buy the rumor, sell the news,” and “don’t short a quiet market.” But the one that pertains to this week which might be a little lesser-known is “sell Rosh Hashanah, buy Yom Kippur.”

Rosh Hashanah, also known as the Jewish New Year, started this week. This means that those in the Jewish religion who also participate in the stock market typically take a week off from trading to celebrate their holiday. So if you think about an entire group of people who are absent from the activity, input, and money flow of the market then you can see why the idea of market weakness (a dip) during the holiday makes sense.

I looked up some historical context of this adage and it seems as though there isn’t necessarily a strong case for it to come to fruition each year, but I’d argue this year it’s kicking in as we did actually get a pullback this week.

Yom Kippur is the end of the Jewish holiday and is usually when those traders can come back to the market and start contributing to the activity. Therefore, buying the dip that was created at the beginning of this holiday sets up a play for any rise in equities. It could then be added to the books that this year the phrase worked out like a charm. 
If you are choosing to celebrate, have a great time away from the market and I hope you come back refreshed. To everyone else, consider paying extra close attention to market dips this week.

Your Profit Pilot, TG


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