Investors are Most Bullish on the Weekend, Most Bearish Mid-Week

Stock market social media giant StockTwits recently mined their extensive data to find out when investors and traders are most bullish or bearish, and the results are pretty interesting.

According to their study, bullish sentiment tends to peak on the weekends and trading day mornings:

While investors and traders were overall quite bullish, investors were most bullish on weekends (when the market is closed) and trading day mornings (when the market was about to open).

Quite simply, investors were most bullish when the market was closed.

In contrast, bearish sentiment seems to spike toward mid-week and following the close:

[Investors] were most bearish in the middle of the trading week, towards the end of the day and after the close.

Naturally, the question is, why is this the case? StockTwits has a few ideas about that too:

  • When money is at risk, people are more nervous and money is more likely (or perceived to be more likely) at risk while the markets are open.
  • On nights and weekends people are doing research and mostly sharing their picks, and since most people go long, picks that they share tend to be bullish.
  • The risk of negative news event is much more likely while markets are open then they are when they are closed.

Other factors could include the daily rhythm of humans’ mindset (optimistic earlier, pessimistic later in the day?), or the fact that people are generally happier on the weekends when they aren’t working.

The implications of these patterns are also unclear. Should you wait until mid-week to make an allocation, when the crowd is more likely to be bearish on the SPDR Dow Jones Industrial Average ETF (NYSE:DIA)? Or maybe take a short position early in the week and wait until people get bearish to cash out?

It’ll be interesting to see how the StockTwits team continues to cull and interpret the data moving forward, as the results could have far-reaching implications for the way smart investors put their money to work.

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