Soon, the average investor will celebrate July 4th with hot dogs, fireworks, and a semiannual review of their investment accounts…
Why? Because they have been busy all year and finally have the time to do so.
Independence Day is one of the few holidays that does not always fall on a Friday or a Monday. For many corporate professionals, this justifies taking an extended vacation. This year, July 4th falls on a Thursday, meaning the market will close at noon on July 3rd.
So, when a national holiday falls in the middle of the week like July 4th, how will the stock market be affected?
The key players driving the market during this year’s middle-of-the-week July 4th holiday are composed of three major trading groups and their activity during this period varies as outlined below.
Institutional Traders Do Less:
More than likely, these individuals will be taking off a portion of the July 4th holiday week, if not the entire week. This will potentially result in less-active trading for this period.
Automated Traders Do the Same:
Automated traders are computerized trading programs, which will not rest over the holiday. However, the pricing parameters remain set and execute only based off prior-set trading points if they are hit.
Busy individuals Do More:
Corporate professionals and executives account for many of the busy individuals who traditionally review their accounts at the end of the year and over long holiday weeks and/or weekends like the Fourth of July and Thanksgiving. If this group includes you, you'll want to be sure that you're choosing trades and stocks that align with your long term investment strategy.
If institutional traders are not executing big trades during the July 4th week, the individual trader will account for a larger portion of the trading volume during the holiday break.
Thus, the individual trader should have more influence over the market’s activity than they normally would during an average market week.
Historically, the individual consumer’s trading activity has produced large swings in the market during similar mid-week holidays.
Should this scenario have any effect on your decision to buy or sell over the next week?
What is your plan?
At Willis Johnson & Associates, we have our price targets for trading already set. In addition, we will have staff present during the upcoming holiday week in case a change needs to be made.
If you want a second opinion about your investment strategy and how it can affect your long-term financial plan, schedule a conversation with a Willis Johnson & Associates financial professional to learn more about what you should consider.