Last Updated on April 19, 2022 by Quantified Trading
What are the stock returns around Easter holiday? How well (or bad) do stocks perform around Easter? We have previously covered all the other holiday effects in the stock market, but not the Easter holiday. Thus, let’s have a look at how the S&P 500 performs before and after the Easter holiday.
Both the week before Easter and the week after Easter show strong stock market performance. The four trading days leading up to Easter and Good Friday have more than five times the average weekly gain, while the week after Easter (Good Friday) has three times the average gain.
In the tests below we use the oldest ETF still traded: The S&P 500 (SPY). The backtest period is from inception in 1993 and the results are compounded.
Keep in mind that the week before and after Easter sometimes is the same as the options expirations week (which has a particularly strong performance in April). In general, April has historically been a very strong month for stocks.
Returns in stocks prior to the Easter holiday
Let’s start by looking at the performance in the stock in the days leading up to Good Friday:
We buy the close of the Friday one week before Good Friday, and we sell at the close of the Thursday the day before Good Friday.
This is what the equity curve looks like:
There are 29 trades, the average gain is 1.1% and the win rate is 63%.
For comparison, any random week has risen 0.22% over the last three decades, thus the week prior to Good Friday has more than five times the gain despite being only four trading days!
The specific trading days inside this week vary. Some are poor while others are strong. For example, this is how one strategy works while holding a couple of days:
(We don’t like to reveal what we did as we preserve it for our paying subscribers for monthly Trading Edges.)
Stock returns after the Easter holiday
Lets’s look at how the S&P 500 performs after the Easter holiday:
We buy the close on the Thursday before Good Friday and we exit at the close of the Friday the week after the Easter holiday. We own the index for five trading days and eight calendar days.
The equity curve looks like this:
Amibroker and Tradestation/Easy Language code for Easter holiday
The backtest was done in Amibroker. For your convenience we have compiled all the code taken from our free trading strategies into one product that contains about 100 different ideas and codes:
- How to enter and exit positions at the close in Amibroker and Tradestation
- Amibroker course – how to get started and how to trade live
Stock returns around Easter holiday – conclusions
We recommend using seasonal trading strategies as part of your system development. Could the Easter holiday be part of such a strategy? Clearly, the stock returns around the Easter holiday show abnormal positive returns, and the nine trading days could potentially be used as part of a trading strategy.