2016 is a Leap Year, and that means one more potential trading day with February 29 on the calendar. In fact, if you are on our mailing list, later today you will receive an email with “once every four years” prices on our trading systems, and custom indicators.
I was curious how if at all, did Leap Day and Leap Year effect the markets. Here are just a few interesting program trading facts.
Note: While the following information is interesting, the conclusion I reached, after all, this research is trading on Leap Day is no different than any regular trading day in the markets,
1. Since the Dow Jones Industrial Average began in 1896, there have been twenty- seven previous leap years, with 1896 being the first one on this list. However, since the Dow Jones Industrial Average did not begin until the month of May 1896 is not considered pertinent.
2. Many traders do not understand why 1900 was not a leap year. With the Gregorian calendar, which is the calendar used by most traders, the following rules decide which years are leap years:
This means that the years 1800, 1900, 2100, 2200, 2300 and 2500 are not leap years, while years 2000 and 2400 are.
3. Since 1896, February 29 Leap Day has occurred on a market trading day in every case except five instances. The years that Leap Day was not on a trading day were 1920, 1948, 1964, 1976 and 1992.
4. Thus, of the twenty leap years that Leap Day has been a market trading day the Dow Jones Industrial Average has closed negative 65% of the time (13 of 20).
5. How has Leap Day closed when the fourth day before it has seen the Dow close positive (equivalent currently to Monday 2/25/08 closing positive)?
6. Since 1896, how often have the fourth, third and second days before a literal Leap Day 2/29 all closed positive (as currently in 2008)?
7. In the twenty leap years that Leap Day has been a trading day, only five times has Leap Day been the literal last trading day of the week. In these five instances, the Dow has closed negative 80% of the time.
8. The most recent time that Leap Day was the last trading day of the week was in 1980. That was also the only one of the previous five instances cited above that saw the Dow close positive.
9. Of all leap years since 1896, 63% of the yearly highs were made in the fourth quarter of the year, two in October, seven in November and eight in December.
10. Of all leap years since 1896, only 18% of yearly lows were made in the fourth quarter of the year, four in October and one in December.
11. Here is a listing of the month of the yearly highs in Leap years since 1896: January 5. February 0. March 1. April 1. May 0. June 2. July 0. August 0. September 1 October 2. November 7. December 8.
12. Here is a listing of the month of the yearly lows in Leap years since 1896. January 8. February 2. March 3. April 1. May 3. June 0. July 2. August 0. September 1. October 4. November 0. December 1.
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