Market is Up for 18 Straight Tuesdays – Investing Strategy?

by ETF Base on May 19, 2013

We’re now in the midst of 18 straight up Tuesdays for the S&P500.  While this is a statistical anomaly, surely there is someone out there who thinks there’s an investing strategy to exploit this “trend”.  Perhaps buy leveraged ETFs on Wednesday nights and sell them Thursday nights?  Perhaps buy call options for even more leverage?  I know the wheels are spinning.  Unlike when I wrote about an actual observable and investable trend of investing on the 1st day of the month (there was a very pronounced positive alpha play here before the mainstream media caught wind of it primarily because of 1st of month fund flows from 401(k)s, pension plans, etc.), there is nothing here for Tuesdays I’m sad to say.  See, this is nothing more than a statistic occurrence that is just as likely to pop up in any given year.  Next year, we may just as well see 18 down Thursdays in a row.

Another school of thought may be the contrary (which shows just how silly this exercise is), which would posit that since we have had 18 up Tuesdays, surely we’re going to switch to having more down Tuesdays than would be expected to make up for this trend.  For instance, there are people who play Roulette who swear by keeping tabs on prior wins of red or black or numbers and make future bets based on where the wheel has landed in the past.  In some cases, they’re betting fortunes.  This is utterly absurd and mathematically impossible to predict future outcomes of random events based on past history.  Same with coin flips.  So, there are real-world similarities here regarding how other people think, but as far as a rational investor?  Do nothing different.  Invest for the long-term and ignore the sensational news blasts that will surely occur this week if we make it 19.

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