Time of Tax Day trading anomaly!

12 april 2022 105
Elena_Berseneva
Elena_Berseneva

Listed among the best MarketCheese authors
1st in the segments "Indices" and "Metals"
2nd in the segments "Currencies" and "US stocks"
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The middle of April is near, and this means, Tax Day, the least favorite day of traders and investors is coming. It falls on April 18 this year.  

 

One of the researches on the stock market distortions in the USA devoted to the Tax Day anomaly has identified the benefit of this anomaly in the forecasting of the American stock market. Specifically, it is indicated that the indices and shares tend to grow the next day after the Tax Day. 

 

The tests of the strategy based on the opening trade depending on Tax Day have shown that the shares of Microsoft, Apple, Intel and Caterpillar are especially sensitive to this anomaly. For them, the average yield of the deal amounts from 1.5% to 2% upon its opening 2 days before the Tax Day


 

Let’s take a closer look at the shares of Microsoft Corporation

 

Like the 11 previous reports, the quarterly report of the company again has turned down to be better than the analyst’s forecasts. The next report for the first quarter will be created on April 28. Theoretically, the optimistic sentiment of investors could remain at least until that date.

 

Also, Microsoft is one of the leading representatives of the American IT sector whose seasonal increase occurs in April. In general, the increase of the sector in April amounts to 2.4%, and this allows us to identify the possible increase of Microsoft by $316 at the end of April.  



 

Variants of the trading strategy considering the listed conditions: 

 

 

1. Market entry:

 

Buy the Microsoft shares during the closing of trading on April 18

 

Market exit:

* Take profit 1 is 2% higher than the bid price.

* Take profit 2 is in the area of $316 level, it is the possible share’s growth together with the IT technology sector for April.  

* Closing of trade at the end of the trading day on April 19, if the Take profit orders haven’t worked up to this moment. 

 

You can limit the losses by the level of $270 or a little bit lower. 

 

 

2. Market entry:

 

Buy the Microsoft shares during the closing of trading on April 14.

 

Market exit:

* Take profit 1 is 0,5% higher than the bid price.

* Take profit 2 is in the area of $316 level, it is the possible share’s growth together with the IT technology sector for April.

* Closing of trade at the end of the trading day on April 19, if the Take profit orders have worked up to this moment. 

 

You can limit the losses by the level of $270 or a little bit lower. 

 

 

Warning!

Trading on financial markets implies high levels of risk and can lead to a loss of investment capital. The MarketCheese team isn’t responsible for the possible loss of Your investment funds.

Elena_Berseneva
Elena_Berseneva

Listed among the best MarketCheese authors
1st in the segments "Indices" and "Metals"
2nd in the segments "Currencies" and "US stocks"
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