Is there any stock market pattern based on the day of the month?
Some people speculate that towards the end of the month, money managers pile money into stocks at the end of the month to anticipate 401k and savings money coming in.
To test this theory, Kevin Haggerty and TradingMarkets.com researched this.
What they did is choose stocks above the 200 day moving average from January 1995 to September 2006, and back-test if the stocks were held for five days. Seven million trades later, those at TradingMarkets.com showed that yes, stocks above the 200 day moving average and held for five days towards the end of the month (23rd to 30th) have performed very well. Stocks above 200 day moving average held for 5 days during the beginning of the month did not do as well (3rd through 8th of the month).
This is a very interesting result, indeed. Money managers do appear to want to purchase stocks towards the end of the month. By the time the beginning of the month comes, those money managers have already spent their investment money.
Best Day of Month to Dollar Cost Average?