Easter Seasonality and the Effect on the Stock Market
Market Indicator for the Week Ahead

Easter Seasonality – Positive or Negative for the Stock Market


easter seasonality

April 08, 2012


Easter is now with us, and according to the table below, the fact that the S&P 500 Index (SPX) is positive on the year should make us quite optimistic for the rest of 2012.

Does the seasonal change marked by the Easter holiday, with the U.S. stock market closed on the preceding Good Friday, tend to produce anomalous returns? To further clarify this question an analysis of the historical behavior of the S&P 500 Index before and after the holiday was conducted.

The Past 30 Easters and the Effect of Easter Seasonality

By researching the past 30 Easters, and when the SPX was sitting on a year-to-date gain through the holiday, it was found that the SPX continued higher for the rest of the year a staggering 17 out of 19 occasions, or 89% of the time. (However, last year was one of those two times the market declined after Easter when it was positive up to that point in the year.)

Also impressive with Easter seasonality is that the market averages a 9.8% return for the rest of the year. The performance is so much better than if the market is down through Easter, in which case the SPX averages only a 0.08% return for the rest of the year, and is positive just 55% of the time.

easter seasonality 1

61 Easters between 1950 – 2010

By using daily closing levels of the SPX for 1950-2010, which occurs 61 times – not counting 2011 as already discussed above, it is evident that:

1. The following chart shows the average daily SPX returns for the three trading days before (GF-3 to GF-1) and the three trading days after (GF+1 to GF+3) the Good Friday market closure over the entire sample period, with one standard deviation variability ranges. The mean daily return for all trading days in the sample is 0.03%. Results on average suggest an up-down-up oscillation from the trading day just before through two trading days after Good Friday.

To check the reliability of this pattern, two sub-samples are applied.

easter seasonality 2

2. The next chart compares the average daily returns for the three trading days before and three trading days after Good Friday for two sub-samples: 1950-1989 (40 events), and 1990-2010 (21 events). This chart has no variability ranges and uses a finer vertical scale than the preceding one. Results provide some support for belief in the pattern noted above.

easter seasonality 3

3. Summary: It appears that there may be an anomalous up-down-up oscillation in the U.S. stock market from the trading day just before through to two trading days after Good Friday.

Further Study of Time Frames for Easter Seasonality

By observing the past 30 Easters, a table, below, has been constructed that shows market returns for the next day, week, and month after the holiday. For comparison, a table showing typical returns for those time frames is included. It appears that buyers take an extra day of Easter vacation, and don't show up to the office on Monday. The day after Easter is positive only 37% of the time and averages a negative return.

Despite Monday's dismal performance, the week and month after Easter are slightly bullish. Going by this data, if you're looking to buy this market after Easter, then you'll want to wait until Tuesday to get in.

easter seasonality 4

Individual Stock Returns during Easter Seasonality

This study was used to determine if there were any individual stocks that tend to trade well immediately following the Easter holiday. This is achieved by taking a cross-sample of optionable, liquid stocks since 2000 and summarizing their returns. Below are nine stocks that have been positive at least 90% of the time in the month of trading after Easter. Note that Campbell Soup (CPB), with this cross-section of stocks, is the only one that has been positive every single year after Easter for the past 12 years.

easter seasonality 5


”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.


Back to Home Page

Search Stock Options
Made Easy


Subscribe to our FREE
newsletter for all the latest options news!

Enter Your Email Address

Enter Your First Name

Follow S_O_M_E on Twitter