Usually Small Gains the Week Before Memorial Day

Option Trading Strategist & Financial Writer • May 24, 2017 at 9:56 AM EDT

Buying the dips continues to be a viable investment strategy.

Trading Strategy

As reported by Jeff Hirsh in the Almanac Trader, over the last 21 years, DJIA has advanced just 47.6% of the time during the week before Memorial Day weekend. Of the five major indices we frequently cite, it is the weakest averaging a 0.29% loss.

S&P 500, Nasdaq and Russell are better, but average performance over the last 21 years is still just a fractional gain. Russell 2000 has the best track record, up 71.4% of the time with an average gain of 0.42%. Since 2003, Russell 2000 has been even stronger, up 12 of 14 weeks with an average 1.17% gain.

The updated graph below confirms investors are in a bullish mode with all the S&P sectors moving higher over the past month. The path of least resistance is higher and “buying the dips” continues to be a viable investment strategy. Also we are generating good profits from credit spreads as stocks basically continue to trade range-bound.

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