Last Hour Strength – Welcome Back!

We’ve been discussing the market’s recent tendency to rally in the last hour of trading numerous times in the last few weeks. To summarize, in the 21 trading days since Christmas, the S&P 500 has been up in the last hour of trading 15 times! With a slight decline in the last hour of trading last Friday, the 20-day rolling total of positive last hours as of Thursday’s close was even stronger as the S&P 500 was up in the final hour of trading 75% of the time. Strength in the last hour of trading is generally considered a bullish trend as it signals that investors aren’t worried about the overnight risk of being long equities while the market is closed.

The fact that we have seen such consistent strength in the last hour has been a change of pace for the market based on recent trends. From a longer-term perspective, though, such strength is not uncommon. The chart below shows the rolling 20-day total of the number of days where the S&P 500 saw positive returns in the last hour of trading. Before the most recent occurrence, the last time the percentage of days with positive last hours reached 75% or more over a 20-trading period was in October 2017. That’s a pretty long gap without any occurrences, but when you look back over time, this long of a gap was more of the exception than the rule. In fact, before 2018 the last time that the 20-day rolling total of positive last hours never reached 15 in a calendar year was in 2008.

(Click on image to enlarge)

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