Every active trader knows about stock market holidays, those full business days on which there is no trading on any of the exchanges. People whose professions revolve around trading usually take the day off, get in some golf, or rest up for the next session during one of the 10 days off. But, there’s a lot more to the topic than meets the eye. That’s because anytime an exchange closes, massive economic factors come into play that can have an impact on your portfolio. Here’s what you need to know about these days.
What are the Big Nine?
Most of the main days when trading shuts down are easy enough to guess, like New Year’s Day and Christmas Day. But were you aware that major exchanges also cease activity on Memorial, Labor, and Martin Luther King Day? In addition, trading is closed on Washington’s birthday, Good Friday, 4th of July, and Thanksgiving. By tradition, the exchanges in the U.S. also close a few hours early on Christmas eve and the Friday after Thanksgiving. Early closure usually means 1 p.m. So, each year, full-time traders get nine full days and two half-days of built-in vacation time.
In some cases, closures take place after or during special events. For example, whenever a U.S. president dies, exchanges shut down for a full session. That usually takes place a full 24 hours after announcement of the death. Other unique happenings include natural disasters, acts of war, national emergencies, and technical breakdowns. Only one time in the history of the nation has the NYSE ceased trading for any other reason. That occurrence took place on January 23, 1965. All floor activity stopped for two full minutes in honor of the passing of British leader Winston Churchill, who had played a central role in the Allied victory of WWII.
The Strange Case of August
Some market professionals consider the entire month of August to be a sort of holiday because activity slows down so much. One reason for this apparent anomaly is that most brokerages and financial institutions give their exchange floor agents several weeks off during the month of August. Plus, a high percentage of working adults take their annual two-week vacations during the end of summer month. A number of individual stockholders simply stay out of the markets during August and resume activity in the first week of September.
The Effect of Weekends, August, and Lost Days
It’s tempting to view time off as nothing more than a break, a period during which people relax and spend precious weeks with their families. That’s true, but there’s something else at work. Keep in mind that money never really sleeps, to paraphrase a famous film quote (“Wall Street). When institutions and individuals anticipate a long break in action, they often run prices up just before the closing bell before a long weekend or special shutdown period. Even weekends, which should be considered noting more than 48-hour long holidays, have their own way of impacting the investment cycle.
If you watch securities prices on a late Friday afternoon, you’ll see all sorts of scrambling, wild buying, and sometimes frantic selling. Mostly, that’s due to institutional players trying to get their accounts in order for the upcoming Monday morning. A lot can happen on a weekend. If you’re holding 1,000 shares of a stock that can tank or surge based on a news story that’s expected to come out on Saturday, it might be a good idea to sell before the Friday closing bell. Alternately, if a trader thinks ABC company is set to take off on a corporate announcement over the weekend, it might make sense to buy shares before the Friday close.