Saturday, June 28, 2008

Holiday Shortened Weekends Do NOT Matter

With the Independence Day holiday weekend coming up fast, I was really curious as to how oil prices have moved in the past relative to holiday weekends.

Here is a list of oil prices from the past year prior to a holiday shortened weekend. The prices reflected are the prior two trading days, so I could compute a price % change. (For example, if the holiday is on a Monday, I gathered data from the past Thursday and Friday). I do not take into account holidays that fall in the middle of the week.




% Change





















As you can see, there really is no sufficient data to go by to make a serious projection or conclusion on the effect of a holiday weekend on price or sentiment. I did not even post data from before Summer (2007) because it is all repetitive. There are conflicting price swings going into a long weekend, not always up and not always down. It annoys me a bit that often people make such a big deal about “traders not wanting to be short oil going into a long weekend.”

Point taken, but in this market, I would not want to be short oil any day. There are many things that can spring up at any time during the week: Geopolitical events, EIA Inventory data, natural disasters and policy changes just to name a few.

The prices reflect that- the rumored, likely, probable or even improbable events that could happen any given day. Yes, there is an increased chance of a market moving event if you throw in a weekend-plus-1. My point is: People are not short all week in this market just to buy back on a Friday to hedge.

I realize oil gets plenty of coverage, as it no question deserves. I just think these long weekends are a bit overrated in terms of traders' sentiment.

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