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Patterns To Watch

Black Friday Market: One of My Favorite Seasonal Patterns

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Written by Timothy Sykes
Updated 1/9/2023 10 min read

Every year I sit back and laugh at the hoards of people who rush to stores for Black Friday deals.

People are obsessed with STUFF. It seems like every year, some crazy deal causes people to go insane and someone innocent gets in the way. Please don’t be the person who goes viral tackling an elderly woman to get to a TV.

Black Friday deals? No thanks. I’ll cool my heels and wait for Cyber Monday. These days, online deals online seem better than what you find in stores. Plus, I can skip the lines AND shop in my underwear? Double win.

For many families, it’s a tradition to dive into Black Friday madness, but it doesn’t make a ton of sense to me. It all seems like junk to me. Will some gadget that will be obsolete in six months really make your life better?

I think you should spend your time and money on things that can really make a difference … like the killer Black Friday and Cyber Monday sales at StocksToTrade. This is something you can actually use and that can help improve your life. 

I’ll discuss that deal more in a bit, but first … how did Black Friday become a cultural phenomenon?

What Is Black Friday?

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Black Friday is always the Friday following Thanksgiving. This year, Thanksgiving is late, which means Black Friday will land on Friday, November 29.

Black Friday is the busiest shopping day of the year for many Americans. It also marks the beginning of the holiday season.

It’s crazy that 2019 is nearly over! 

So how did Black Friday become a ‘cultural’ tradition? And why is this period critical for day traders?

First, let’s look at how Black Friday became … well … Black Friday.

From what I can tell, the term “Black Friday” was coined by police officers in Philadelphia to describe the massive traffic jams following Thanksgiving.

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It’s a common misconception that the name comes from retailer profits. Some think it’s the day stores go from the red (i.e., unprofitable) to black (profitable) on the year. Not true. But this day does spur the U.S. economy — many people leave their homes to open their wallets and SPEND.

The holiday season is critical for retail stores. The influx of consumer spending allows many stores to have record fourth-quarter earnings.

The sad part? Consumers tend to waste money on superficial goods instead of using their hard-earned cash on something really useful or to help their loved ones or community.

But what can I do? If people want to waste their money, that’s up to them.

I get it. I used to splurge on fancy cars. But over the years, I learned these things don’t make me happy. So, as I announced at the 2019 Trader & Investor Summit, (get the DVD here) I sold all my cars.

Yep … no more Ferrari, Rolls, or Lambo. 

I don’t want to waste my hard-earned money. I do want to help make the world a better place. So I helped form Karmagawa. And I’m proud to say that Karmagawa has now built nearly 60 schools and libraries. And we’re only getting started.

Wall Street’s Negative History With Black Days

The use of the term ‘black’ in the market doesn’t always spark awesome memories. In fact, it marks some of the worst market catastrophes throughout history.

So it kinda bothers me that Black Friday is supposed to be this joyful thing, but there’s this super bleak history lurking in the background.

There’s Black Monday, which occurred on October 19, 1987. That’s when the Dow dropped 23%. To this day, Black Monday is the most significant one-day drop in stock market history.

Another dark day in the stock market? Black Thursday on October 24, 1929. That kicked off the Great Depression. Only five days later was Black Tuesday, on October 29, 1929. That’s when the stock market dropped another 12% despite all efforts by major investors to support stock prices.

After Black Thursday and Black Tuesday, investor confidence shattered. It took decades for the public to regain trust in the market. At the lows of the Great Depression, the stock market had lost nearly 89% of its value!

It’s safe to say, that “Black” days don’t exactly have a positive connotation on Wall Street…

But even with all that, every year, Black Friday signals the beginning of my favorite season to trade.

Black Friday’s Trading Relevance

For most, the holidays are a happy time, full of family, joy, and giving. And for traders, it can be one of the best times of the year.

As the year comes to a close, volatility typically ramps up in the stock market. Almost every year, we see a sector heat up. My dedicated Trading Challenge students prepare for these plays all year.

The holiday season is a hectic time of year for people. And of course family is always important, but my most dedicated students continue to find time to study and prepare. The more prepared you are, the easier it’ll be for you to capitalize on the January Effect, shorter market hours, and the increased volatility in penny stocks.

Shorter Market Hours

It may seem counterintuitive, but shorter market hours can actually create more opportunities. While other traders take time off to hang with family or for other holiday fun, there’ll be more plays for the traders who are willing to stick around.

On Black Friday, the markets close early at 1 p.m. Eastern time. This means there are three hours less of live market time. The day’s volatility gets compacted into a shorter time period. The midday lull is squashed as traders compete in the highly volatile open, then quickly transition to end-of-day and power-hour trading.

There can be wild moves on these short trading days because there’s no break in volatility.

Remember, no play is guaranteed. Although this time of year is typically full of wild penny stock spikes, nothing is guaranteed. Be patient and let the best plays come to you.

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As we continue into the new year, Christmas Eve also is a shorter trading day. The entire market is closed on Christmas Day.

Even though the market will be open outside these days, many traders will be away from their desks. With fewer traders in the market, opportunities can pop up for those who are prepared.

Study vs. Holidays

Traders are real people, and it’s healthy to take days off. After all, most people become traders because they want to have the freedom to do whatever they want with their time rather than working a 9–5 job.

I’m not saying you have to give up your holiday season or time with your family. But even small sacrifices can make a difference in your trading career.

Over the next five weeks, many traders will be unfocused and undisciplined. Will you be one of them? The choice is yours. But I guarantee my top students will be laser-focused as the year closes.

January Effect

I love this pattern! It allowed me to profit millions in the market over the last 20 years.

But before I go any further, I gotta make the lawyers happy … Keep in mind that I’m not giving you legal or financial advice. You should consult an attorney or accountant for that kind of stuff. Do your due diligence.

As 2019 closes, individuals will sell off their losing investments for tax write-offs. This is the first stage of the January Effect. 

Stocks are artificially pushed lower because of tax laws. I’m not looking to take advantage of these drops, but I’ll remember to keep penny stocks with unusually high volume on my weekly watchlist.

Once the year ends, stocks are poised to spike in January as investors repurchase shares for the 2020 tax year. This is especially true for penny stocks.

The January Effect occurs every year and can help traders start the new year with a BANG! But only prepared traders … So how can you anticipate the January Effect? Here are a few hints…

  1. Watch for low-priced stocks trading larger-than-average volume. The easiest way to find these is to use this revolutionary software.
  2. To fully be prepared, you need to join my Trading Challenge. The students in my challenge are dedicated and work together on trading ideas. They also have access to my weekly watchlist, 6,000+ video lessons, and years of January Effect webinars that are strictly for Challenge students only.
  3. Invest in your trading education instead of some worthless garbage. The best penny stock trading software is having a HUGE Black Friday and Cyber Monday sale. There’s no better time to start your trading journey thanks to this incredible tool and its Oracle Daily Direction Alerts.
  4. STUDY! I can’t emphasize studying enough. The more you study now, the easier it’ll be to spot a January Effect play.

My Year-End Hope for You

We’re coming to the end of the decade. We’ve seen unprecedented advancement and technological changes in the stock market. Average people have more access to stock data than previous generations could even imagine.

As we celebrate Thanksgiving and start the holiday shopping season with Black Friday, I hope you take the time to consider what’s truly important to you. This year, I hope you start working on your passion. Whether that’s trading or something else, invest in your education. Don’t waste your money on some overblown Black Friday deal.

I hope you take advantage of the great StocksToTrade Black Friday and Cyber Monday deals — it can seriously help you every trading day. Remember to work hard and study hard. I want to see you succeed.

2020 will be a big year. But don’t forget, one of the most volatile times in penny stocks has just arrived. Make sure you’re ready to take advantage of the opportunity.

[Note that my results aren’t typical. I’ve put in the time and dedication and have exceptional skills and knowledge. Most traders lose money. Always remember trading is risky … never risk more than you can afford.]

How will you prep for this trading season and the new year? Leave a comment and let me know!

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”