How Stocks Tend to Perform After Black Friday

Plus, a list of stocks that are relevant to the holiday season

Senior Quantitative Analyst
Nov 23, 2022 at 8:00 AM
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Thanksgiving week means Black Friday and the beginning of holiday shopping. Next week reports of Black Friday sales and the amount of foot traffic will be used to gauge the strength of both the consumer and the economy. It’s an illuminating week for stocks. This week I’m looking at how stocks have tended to perform in the week after Black Friday. I will also test whether it is, in fact, a good indicator for stocks going forward. Finally, I’ll show a list of retailers and other relevant stocks and how they’ve performed during the crucial week after Black Friday.

The Week After Black Friday

The table below summarizes the S&P 500 Index's (SPX) performance in the week after Black Friday. Since 1990, it has been bullish, averaging a gain of 0.63% for week compared to a 0.17% gain for other weeks. Also, the percentage of returns that have been positive is higher than typical weeks (66% vs. 56%). I thought you might see a higher standard deviation during the week because of reactions to the retail shopping data, but that has not been the case.

Iotw Nov22 Chart 1

Next, I broke down Black Friday week by the day. If you’re looking to play the seasonality, wait until next Monday to buy the market. Monday after Black Friday has been a bad day for stocks averaging a loss of 0.23% with 41% of the returns positive. Wednesday and especially Friday have been the days that helped next week be historically bullish. Friday of next week has averaged a gain of 0.58% with 78% of the returns positive.

IotW Nov22 Chart 2

Black Friday Week Indicator

If the Black Friday reports reveal information about the economy, maybe it can tell us about the direction of the stock market. The table below shows how the S&P 500 performed over the next three months depending on how the market did the week after Black Friday. This has been an excellent indicator at predicting the next three months. When the S&P 500 gained 1% or more the week after Black Friday, the next three months averaged a return of 3.9% with over 80% of the returns positive. When next week has been down by a percent or more, the index lost an average of 4.6% with just 33% of the returns positive.

IotW Nov22 Chart 3

The indicator has not worked when you shorten the time frame. The table below shows the results for just the rest of the year. Whether the S&P 500 was positive or negative or anywhere in between the week after Black Friday, the last few weeks of the year have been bullish. One theory might be other factors are at work over the last few weeks of the year (tax reasons, end-of-year portfolio adjusting, etc.) then the indicator can play out after that.

Iotw Nov22 Chart 4

Notable Stocks Next Week

Finally, below is a list of some S&P 500 retailers and other stocks I figure to be relevant for the holiday shopping season. The figures summarize how the stocks have performed in the week after Black Friday over the past 10 years. HP (HPQ) and Nike (NKE) top the list being positive eight of the past 10 years. Interestingly, (AMZN) is at the bottom of the list averaging a loss of 0.6% during the week and positive just two year out of the past decade.

IotW Nov22 Chart 5


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