Buying the S&P 500 ETF on the close and selling it on the open has been one of the most profitable trades in the stock market since the ETF's inception in 1993, according to research from Bespoke Investment Group. But in 2020, this trend reversed amid the coronavirus pandemic, with all of the gains in the market coming from regular trading hour sessions, rather than after-hours and pre-market trading sessions. Buying the open and selling the close has returned 16.9% over the first 100 trading days of 2020, according to Bespoke. Over that same time period, buying the close and selling the open has returned -19.7%. Read more on Business Insider.
One of the most profitable trades since 1993 is broken amid the coronavirus pandemic. Data from Bespoke Investment Group shows that if a trader bought the S&P 500 ETF SPY at 4:00 p.m. on the close and sold it the next day at 9:30 a.m. on the open, every single day since 1993, they would be up 570%. On the flip side, if a trader bought the SPY at 9:30 a.m. on the open and sold it later that day at 4:00 p.m. on the close, every single day since 1993, they would be up a meager 3%.
For nearly three decades, 99% of the gains in the stock market have occurred outside of the market's regular 9:30 a.m. to 4:00 p.m. trading hours. But now, amid the coronavirus pandemic, this trade has reversed. Over the first 100 trading days of 2020, a trader that bought the close and sold the open would be down 19.7%. A trader that bought the open and sold the close would be up 16.9%.
The spread in performance between these two trading strategies is historic. Read more: Billionaire investor Mario Gabelli's flagship fund has delivered a 3,082% return since its inception. He told us his 13 favorite stocks right now - and the trends he's betting on for a post-coronavirus world. "There has never been a 100-trading day period like this where the intraday action has been more positive than the after-hours action to this degree," Bespoke said. Since the March 23 lows, intraday trading sessions have remained bullish, while after-hour trading sessions are turning more bullish. While the most profitable trade since 1993 has been broken year-to-date in 2020, there are signs that it has some life and may return. Month-to-date, the S&P 500 has gained 147 points total in after-hours sessions, while it has lost 24 points during its regular trading hours, according to historical data from Yahoo Finance.Join the conversation about this story » NOW WATCH: Why thoroughbred horse semen is the world's most expensive liquid
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Summary List Placement US stocks gained on Friday as Wall Street monitored Washington for updates to...Summary List Placement US stocks gained on Friday as Wall Street monitored Washington for updates to stimulus negotiations. House Speaker Nancy Pelosi previously said she hopes to reach an agreement before the weekend, and said Thursday that Democrats and the White House are "just about there" on a compromise. Still, Senate Republicans are poised to block the measure, and odds a bill can pass ahead of Election Day are dwindling. Oil futures edged higher, with West Texas Intermediate crude climbing as much as 0.8% to $40.64 per barrel. Watch major indexes update live here. US equities rose on Friday as investors held out hope for a stimulus agreement between the White House and Democrats ahead of their end-of-week deadline. Odds for a pre-election spending deal are slim. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin continue to hold talks on a measure less than two weeks before Election Day. Pelosi indicated Thursday that the two groups are "just about there" on reaching an agreement. The speaker previously said she aims to finalize a deal before this weekend. Still, Senate Republicans are all but certain to ignore the bill on grounds that it costs too much. Democrats blocked Republicans' $500 billion skinny bill on Wednesday, leaving both sides at a stalemate for passing new relief. Here's where US indexes stood shortly after the 9:30 a.m. ET market open on Friday: S&P 500: 3,466.25, up 0.37% (12.76 points) Dow Jones industrial average: 28,436.52, up 0.26% (72.86 points) Nasdaq composite: 11,537.31, up 0.27% Read more: MORGAN STANLEY: Buy these 61 stocks that will offer major earnings-driven upside following an imminent 10% market sell-off Some Wall Street strategists have pushed their stimulus forecasts past the election, and see a possible Democratic sweep yielding an even larger relief bill in early 2021. The presidential election's outcome is "the biggest variable" for stimulus moving forward, Goldman Sachs said earlier in the week, adding that talks will continue since "neither side benefits from ending them." Thursday night's presidential debate was decidedly less market-moving than the first, with President Donald Trump taking a less combative approach toward former Vice President Joe Biden. The two discussed a range of topics including the coronavirus pandemic, health care, and race relations, but futures barely moved throughout the hour-and-a-half event. Gilead shares leaped after its remdesivir compound became the first drug authorized by the Food and Drug Administration to tread COVID-19. Read more: Market wizard Jim Rogers started trading with $600 and now has a reported net worth of $300 million. He shares the 8 trading rules that ensured his success. Intel sank after weakness in its server business soured otherwise positive earnings results. The company forecasted the decline to last through the fourth quarter, but still raised its full-year guidance. Bitcoin slowed its roll after rallying to its highest since June 2019 on Thursday. The cryptocurrency's 14-day Relative Strength Index leaped above 80, signaling the token is overbought after rallying 10% into Friday. Spot gold gained slightly to $1,909.91 per ounce at intraday highs. The US dollar dipped against peers and Treasury yields ticked higher. Oil edged higher. West Texas Intermediate crude gained as much as 0.8% to $40.64 per barrel. Brent crude, oil's international benchmark, rose 20.6% to $42.46 per barrel at intraday highs. Now read more markets coverage from Markets Insider and Business Insider: US existing home sales spike to fastest rate since 2006 as housing-market boom accelerates further Billionaire investor Paul Tudor Jones calls bitcoin 'the best inflation trade' as the token surges above $13,000 Big investors pay thousands of dollars for Danielle DiMartino Booth's research. The former Fed advisor explains how the central bank has distorted markets — and shares 2 areas where analytical traders can still find returns.Join the conversation about this story » NOW WATCH: A cleaning expert reveals her 3-step method for cleaning your entire home quickly
Robinhood warns day traders to raise their cash buffers on 'widely-held stocks' hours before market open
Summary List Placement Trading platform Robinhood warned day traders on Thursday night to raise their cash...Summary List Placement Trading platform Robinhood warned day traders on Thursday night to raise their cash buffers on "several widely-held stocks" hours before market open, or they could face an account deficit. The trading platform said it would increase the minimum amount required to be held in user accounts from October 16 onwards to "help protect" customers from increased election volatility. "If you hold any of the affected stocks on margin, your buying power may decrease or your account may be in a deficit after these changes go into effect," Robinhood said. "If you do not resolve the margin call, we may need to sell off some or all of your stock to cover the call," it said. Visit Business Insider's homepage for more stories. Retail trading platform Robinhood warned users late on Thursday to raise their cash reserves on "several widely-held stocks," hours before market open. The company, which has spearheaded commission-free stock and ETF trading, said it would increase the margin maintenance requirements for those stocks affected by election volatility. It maintains the move would help protect customers from increased election volatility. Packy McCormick, a day trader, posted the warning in a tweet at 9.42 pm ET on Thursday. Other users blasted the move, with one even saying "I'm not sure how this could be legal." Investing on margins means that traders can borrow money as loans from Robinhood to buy stocks and options, making it possible to boost investment gains. Margin maintenance, meanwhile, is the minimum amount required to be held in the account to avoid stumbling blocks with Robinhood. "If you hold any of the affected stocks on margin, your buying power may decrease or your account may be in a deficit after these changes go into effect," the warning read. Read More: 200-plus money managers pay thousands to see which stocks are on Jim Osman's buy list. He details 2 he sees doubling and says one has at least 50% left to soar. Users will be issued a "margin call" if they fall short of the required minimum and don't deposit additional funds to increase their account value by the end of the trading day on October 16. "If you do not resolve the margin call, we may need to sell off some or all of your stock to cover the call," it said. It is common practice on futures exchanges for margin requirements to increase as market volatility rises, because of the greater potential for traders to rack up losses that they cannot then afford to cover. Stock market volatility rose earlier this year to its highest since the extremes witnessed during the financial crisis of 2008 and 2009, as investors around the world dumped equities to hold cash, government bonds, and even gold. The warning was issued on the same day that Bloomberg reported hackers gained access to "almost 2,000" trading accounts on Robinhood's platform. This week, the company sent a push notification through its app prompting customers to start using two-factor authentication. Security "is a top priority and something we take very seriously," a spokesperson told Business Insider. The trading platform has seen its popularity explode recently, with COVID-19 only fuelling its prominence, given the boom in retail trading thanks in part to the volatility across markets from uncertainty over coronavirus. Lockdowns earlier this year that halted most professional sporting activity, for example, encouraged many amateur investors to try day-trading. Read More: Lori Keith's mutual fund has grown 98,000% in 12 years by focusing on unflashy companies. She told us about 7 such stocks that thrived in the recession — and will likely do even better in the recovery.SEE ALSO: Warren Buffett's stock portfolio took a $1.6 billion hit from Bank of America and Wells Fargo in a single day Join the conversation about this story » NOW WATCH: How the Navy's largest hospital ship can help with the coronavirus
Once, exchange-traded funds all tried to mirror the market. Now some are trying to beat it,...Once, exchange-traded funds all tried to mirror the market. Now some are trying to beat it, in some cases by concealing their day-to-day trades.