• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Investing “Buy the close, sell the open” still rewards for carrying overnight risk
Investing

“Buy the close, sell the open” still rewards for carrying overnight risk

by November 28, 2022
by November 28, 2022 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

US stocks opened the day and the week lower by a little over half a percentage point, but they rallied in November. With two other trading days left in the month and ahead of December, it is worth having a detailed look at how stocks performed during and after the regular, official trading hours.

The regular trading hours in the United States are between 09:30 AM and 04:00 PM ET. However, one can trade stocks after hours, even though liquidity is thinner.

According to an article in Financial Times, algorithmic trading is responsible for buying shares sold during regular market hours and selling them when the markets open the next day.

The pattern led to overnight returns much bigger than during the regular market opening hours. More precisely, the “buy the close, sell the open” strategy is now up +1100% since 1993.

Effectively, traders and investors are rewarded for carrying overnight risk.

On the other hand, “buy the open, sell the close” delivered negative returns over the same period.

European market openings are responsible for large positive average returns

Returns tend to spike between 02:00 AM and 03:00 AM in New York. More exactly, when European traders start working, US stocks enjoy an upward drift.

Another reason US stocks outperform after hours is the schedule of US corporate earnings. Some 25% of US companies report their earnings after the market closes.

Moreover, about 60% of the companies report their quarterly earnings before stocks start trading in the early American session. Because most companies beat the estimates, we have another explanation of why stocks outperform outside the regular trading hours.

All in all, trading financial markets requires a complete understanding of all everything that might move markets. So is this just another market anomaly?  

Regardless of it, carrying overnight risk has rewarded investors in the last two decades.

The post “Buy the close, sell the open” still rewards for carrying overnight risk appeared first on Invezz.

You Might Also Like
  • Lululemon stock sinks following lowered outlook: buy the dip?
  • 3 takeaways after Wednesday’s FOMC Minutes release
  • Here’s what protests at Foxconn plant mean for the Apple stock
  • Should you buy JPMorgan stock after its Q4 earnings?
Share
0
FacebookTwitterPinterestWhatsapp

previous post
I, Travel: In Wonder at the Achievements of a Free Society
next post
Gene Munster doesn’t see China shutdowns as a threat for Apple Inc

You may also like

Why You Should Invest in Metals

April 27, 2023

Is Coinbase stock a ‘buy’ after announcing second round of...

January 10, 2023

WisdomTree unveils nine new blockchain-enabled funds

December 14, 2022

This software stock just shot up 25%: find out more

December 6, 2022

Is There Such A Thing As Risk-Management Within Crypto Trading?

October 15, 2024

FTSE 100 forecast for December 2022

December 5, 2022

Activist Dan Loeb ups his stake in Bath & Body...

December 9, 2022

A preview of the December NFP report and its implications...

November 30, 2022

AMC shares opened 25% down on Thursday: find out more

December 22, 2022

Should you buy or sell the Dax index next year...

December 30, 2022

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • How to Find Compelling Charts in Every Sector

      July 10, 2025
    • White House accuses Powell of mismanaging Federal Reserve, citing headquarters renovation

      July 10, 2025
    • Italian chocolate giant Ferrero to buy Kellogg’s Froot Loops maker

      July 10, 2025
    • OpenAI to release web browser in challenge to Google Chrome

      July 10, 2025
    • Sports executive charged with bid-rigging in Texas arena project

      July 10, 2025

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 3,631 views
    • 2

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,919 views
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,607 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,577 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,451 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,171)
    • Investing (538)
    • Stock (2,662)

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 2

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • How to Find Compelling Charts in Every Sector

      July 10, 2025
    • White House accuses Powell of mismanaging Federal Reserve, citing headquarters...

      July 10, 2025
    • Italian chocolate giant Ferrero to buy Kellogg’s Froot Loops maker

      July 10, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,171)
    • Investing (538)
    • Stock (2,662)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Long Call Vs. Short Put

    August 29, 2023

    What to expect from the eurozone...

    November 30, 2022

    AMC shares opened 25% down on...

    December 22, 2022
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here