In 2024, over 100% of the net gain in Nasdaq 100 futures has occurred at night and during periods of low trading volume. As the saying goes, "amateurs trade the open, pros trade the close." If we take a long position at the close (4:00 PM EST) and exit at the open (9:30 AM EST), the Nasdaq futures gain 4,144 points for the year. By comparison, the Nasdaq 100 Index itself is up 4,104 points in 2024, a +24.3% annual increase. Remarkably, this means that while the index shows a strong yearly gain, the day session has a net negative return, with all the net gain concentrated in overnight trading.
Nighttime bullish trends have been a consistent observation for years, but 2024 stands out as the year with the largest point gain during overnight sessions, coupled with a net loss during the day. Additionally, we've noticed more pronounced bullish trends during FOMC days, holiday-shortened sessions, and election weeks than usual.
It’s striking that the entire gain in this strong Nasdaq bull market of 2024 has come from periods of lighter volume and reduced trading activity. This year has been unique in that the most favorable price action and strongest trends in stock indexes have occurred during times we traditionally don’t trade.
Looking ahead, we anticipate a potential shift in this pattern through one of two scenarios:
1.) The bull market trend continues, and some of the net gains shift to the day session.
2.) A bear market emerges in 2025 based on the 21 month cycle from 2021. (21 is a Fibonacci number)
We are prepared for either scenario. If the bull market persists with gains concentrated in overnight, holiday, and FOMC sessions, we have updated strategies ready to deploy as we move into December and will trade the market higher in the night session.
留言