In my previous posts, I've focused quite a bit on the fascinating 'weekdays phenomenon' and how it plays a pivotal role in financial markets. Today's trading session further validates the reliability of this approach, making it an essential tool for anyone venturing into the financial market.
Leveraging Python, I've devised a script that meticulously tracks the one-minute Nasdaq 100 index futures (NQ) prices right from the time the market opens at 9:30 am (EST) to when it closes at 4:00 pm (EST). This allows me to discern unique patterns and trends for each weekday for a given period of time (e.g., last 200 days), and uncover insightful data to answer two critical questions: Which weekdays generally yield the highest returns? What characteristic price patterns does each weekday exhibit?
The results from this analysis, which encapsulates the last 200 trading days, are nothing short of intriguing. Four out of the five weekdays were found to consistently deliver positive returns. Surprisingly, Thursdays and Fridays emerged as the all-stars, outshining all other days with the highest returns. Contrarily, Tuesdays played the villain, predominantly rendering negative returns.
So, what does this imply for you as an investor or trader? This information has two primary implications, both immensely valuable for your trading strategy.
First, armed with the knowledge that Tuesdays typically offer negative returns, you might consider treading carefully on this day, perhaps even avoiding trading altogether. Conversely, with Thursdays and Fridays promising superior returns, you might strategize to increase your position size on these days.
Second, the analysis also presents an opportunity to observe intraday price patterns, allowing you to identify lucrative entry points based on the evolving price structure.
Delving into the Intraday Price Patterns
Let's take a closer look at a typical Thursday. The price action often kicks off with a minor double dip during the early trading hours.
Thursday Average Price Pattern, Last 200 days
Contrast this with today's session: the price exhibited a weak opening, sliding below the opening level within the first ten minutes of the market. The price then attempted to ascend but faltered, resulting in another dip below the opening price. This was followed by a strong rebound, eventually transitioning into a solid intraday bull run.
NQ, 5min, 1 June, 2023
This pattern observation can help traders identify early signs of a potential intraday trend reversal. It's essential to pay attention to these price patterns, as they can provide valuable signals about future price movements. Being able to accurately predict these movements, even if it's just a few minutes ahead, can be the key to successful trading.
In conclusion, using advanced analytics tools developed with the help of the Python scripts, traders can gain new insights and discover novel strategies. The weekdays phenomenon is just one example of how the stock market often moves in predictable patterns. By understanding these patterns, you can make more informed decisions and, hopefully, improve your trading performance. As always, remember to incorporate other technical and fundamental analyses into your trading strategy for a well-rounded approach.
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