Summer Kick-Off Usually Good for Stocks

The Memorial Day holiday Monday marks the beginning of summer, and typically precedes a positive week for the stock market, history shows.

The four-day week after the holiday has seen the Standard & Poor's 500 index , and the Dow Jones industrial average gain in 14 of the last 18 years, according to the Stock Trader's Almanac.

"People kick off the first week of summer by taking Friday off and closing out positions on the Thursday" before, said Jeff Hirsch, publisher and managing editor of the Almanac. Investors "then come back with some sort of psychological euphoria."

While the indexes don't show huge gains in the week after Memorial Day, this year with the Dow average up just 1.1 percent so far, and the S&P 500 down 5.2 percent, investors will be grateful for any move to the upside.

On average, the Dow is up 1.2 percent in the week after Memorial Day, and the S&P 500 is up 1.25 percent, according to Hirsch.


But investors looking for clues on the direction of next week's market by checking trading patterns this week won't have much luck, according to Hirsch.

The indexes barely move in the week prior to the holiday, according to Hirsch, and there is little correlation between the two weeks.

Some money managers were skeptical about predicting a market move based on prior years.

"I have a tough time putting money behind trading patterns," said Tim Ghriskey, a portfolio manager with Conneticut-based Ghriskey Capital Partners LLC, which caters to high net-worth individuals. "To me it's always 50-50 if its up or down on a technical basis."

Ghriskey is looking at the economic data, earnings releases and political news for clues as to market moves next week.

"These factors will be the big drivers, not what has occurred in the past," Ghriskey said.