One of the most profitable trades since 1993 is broken amid the coronavirus pandemic, Business Insider - Business Insider Singapore

• Buying the S&P 500 ETF on the close and selling it on the open has been one of the most profitable trades in the stock market since the ETF’s inception in 1993, according to research from Bespoke Investment Group.
• But in 2020, this trend reversed amid the coronavirus pandemic, with all of the gains in the market coming from regular trading hour sessions, rather than after-hours and pre-market trading sessions.
• Buying the open and selling the close has returned 16.9% over the first 100 trading days of 2020, according to Bespoke.
• Over that same time period, buying the close and selling the open has returned -19.7%.
• Read more on Business Insider.

One of the most profitable trades since 1993 is broken amid the coronavirus pandemic.

Data from Bespoke Investment Group shows that if a trader bought the S&P 500 ETF SPY at 4:00 p.m. on the close and sold it the next day at 9:30 a.m. on the open, every single day since 1993, they would be up 570%.

On the flip side, if a trader bought the SPY at 9:30 a.m. on the open and sold it later that day at 4:00 p.m. on the close, every single day since 1993, they would be up a meager 3%.

For nearly three decades, 99% of the gains in the stock market have occurred outside of the market’s regular 9:30 a.m. to 4:00 p.m. trading hours.

But now, amid the coronavirus pandemic, this trade has reversed.

Over the first 100 trading days of 2020, a trader that bought the close and sold the open would be down 19.7%.

A trader that bought the open and sold the close would be up 16.9%.

The spread in performance between these two trading strategies is historic.

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“There has never been a 100-trading day period like this where the intraday action has been more positive than the after-hours action to this degree,” Bespoke said.

Since the March 23 lows, intraday trading sessions have remained bullish, while after-hour trading sessions are turning more bullish.

While the most profitable trade since 1993 has been broken year-to-date in 2020, there are signs that it has some life and may return.

Month-to-date, the S&P 500 has gained 147 points total in after-hours sessions, while it has lost 24 points during its regular trading hours, according to historical data from Yahoo Finance.