Many traders have heard the term “Turnaround Tuesday,” which says that in general Tuesday has been the most favorable day to see a bounce when the market has been selling off. Rob Hanna revisits this premise.
It’s been a while since I updated the Turnaround Tuesday study, so I thought I would do so today. The stats tables below all show results of buying at the close when SPX is down for a certain number of days and exiting the following day. The results are broken out by day of the week. Note that the day listed is the trigger day—not the performance day. So the Monday trigger tracks Tuesday’s performance. Tuesday’s trigger tracks Wednesday’s performance…and so on.
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In every case, Tuesday has shown the most gains—hence the Turnaround Tuesday reputation appears well earned. Though it wasn’t the highest percentage in every case, it was the strongest day on average. Interestingly, this time, I also looked at instances where the SPX had pulled back more than 3 days. Those results are show below.
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Under conditions of a 4-day or greater pullback, Tuesday has disappointed; Monday has been the standout winner. But none of this tells the whole story. For a more detailed breakdown of overnight vs. day gains I would suggest checking out the Overnight Edges Turnaround Tuesday study. Results there are quite intriguing.
by Rob Hanna, President, Overnight Edges, LLC
