With markets always in flux, it is important to not only be aware of sector rotation, but of time rotation.  As we have demonstrated previously, trends emerge as to which time of day is best to be long or short.  In light of a recent Bespoke Investment Group study regarding bullish Mondays (htBilly), we have expanded their work to consider both the overnight gap and day sessions for each day of the week…

Mondays have been clearly bullish since September, 2009, with weekend holders of long positions not being punished since the last week of September.  This suggests that traders may have become complacent and that the next down gap could be a bellweather of a material correction.

Tuesdays have been a mixed bag since September, offering no clear edge.

Wednesday has had a slight bullish edge since November, when the gap and day sessions are considered.

Thursday days have been bearish since late October.

The last two Fridays of December were holidays and the one previous was flat.  Prior to that there was a strong surge overnight ahead of December’s Employment Situation report, but then it was dangerous to hold longs from Thursday to Friday morning since late September.  However, Friday days have largely been kind to longs since November except for on the December Employment report.

As we pointed out in our morning trading report, Employment Situation Fridays have been turning points in 2009.  They have either sparked rallies or been used by institutions to sell into, marking interim tops.  As we are now at highs, longs should take heed…

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