The July 4th Effect
Happy (almost) July 4th Everybody!
Let’s chat about something you might not have on your radar: the “July 4th Effect” and how the holidays shake up the dynamics of the market.
Traditionally, as we gear up for Independence Day celebrations, the stock market tends to show some interesting behaviors right before and after the 4th of July.
This isn’t just patriotic magic… It’s a real trend where the market experiences a bit of a boost.
But why? Well, think about it, around this time we see a surge in consumer spending, traveling, seeing family, going on vacation for the fourth, etc.
Everyone’s out buying stuff for barbecues, road trips, and fireworks. This spending spree often translates to a bump in investor sentiment, giving the market a nice little lift.
Now, another thing that happens around this time is that trading volumes dip. With traders taking time off to enjoy the holiday, Wall Street trading floors are quieter.
You might think a quiet floor is just that: quiet.
But in reality, lower trading volumes can lead to higher volatility. Fewer trades mean that any big news (good or bad) can swing prices more dramatically than on a busier day. So, while many are off enjoying the holiday week, the market could be making some unpredictable moves.
What does this mean for you?
Well, understanding the July 4th Effect and the impact of low-volume trading around the holiday might give you an edge, or at least keep you from being caught off guard.
In these situations, I still trade pretty actively, I just make 2 adjustments:
- I trade with smaller size
- I go for bigger targets
What I am trying to do is limit my risk while at the same time taking advantage of low volume, high volatility moves.
Yesterday’s free Telegram trades, for example, on AGQ and NEM both hit over 100% in less than 24 hours thanks to big moves without a ton of volume. Hopefully some of you grabbed those!
Remember, the goal isn’t just to trade… It’s to trade wisely, armed with all the insights, even those that come with a side of fireworks and apple pie.
Happy (almost) July 4th!
—Nate Tucci
P.S. Sorry, I know I am beating a dead horse at this point, but I have to say it: We just nailed another winner on Automated Options, folks.
That’s 9 for 9 since we launched — a significant win every single week since we opened the program.
At this point, I hope no one is missing out on Automated Options… but if you are, don’t miss any more!
