Investing Research Articles

Do 52-week highs and lows trigger unusual trading and returns for individual stocks? In their recent paper entitled “Volume and Price Patterns Around a Stock’s 52-Week Highs and Lows: Theory and Evidence”, Steven Huddart, Mark Lang and Michelle Yetman examine the evidence that past price extremes influence trading decisions, with focus on 52-week highs and… Keep Reading

…the nonfarm payroll, GDP advance and ISM manufacturing data releases move markets the most, affecting interest rates and currency exchange rates more than stocks. Impacts are most pronounced immediately after release.

…evidence from simple tests does not support a belief that there is a systematic relationship between the annual rate of FDIC bank closings and assistance transactions and annual U.S. stock market returns.

…traders may have difficulty exploiting mispricing of stocks based on analyst disagreement about future earnings, because mispricing and trading friction rise and fall together. Small, nimble traders who carefully manage trading costs may have the best shot.

…retrospective analysis indicates that investors can identify growth stocks, but the long-term premium they pay for them is about twice that warranted by actual growth.

…very small numbers of extreme return days have a massive impact on long-term stock returns in emerging markets. The naive probability of predicting which days will be extreme is very low.

…evidence suggests investors/traders tend to overpay for stocks with recent extreme positive daily returns, and these stocks therefore subsequently tend to underperform.

…investors/traders may be able to enhance momentum trading strategies by focusing on stocks that fit most strongly into a growth or value style.

…this compilation of suggestions and questions can help investors/traders assess the credibility of returns claimed by advisory services.

…there is probably a substantial headwind for those speculating on stock pops by buying near-expiration, out-of-the-money call options. Selling such options may be reliably profitable.