Program Trading & Leap Year
There exists a certain curiosity regarding Leap Day and Leap Year and how the markets have traded. Here are just a few interesting program trading facts.
1. Since the INDU began in 1896 there have been twenty- seven previous leap years, with 1896 being the first one on this list. However, since the INDU 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 almost all traders, the following rules decide which years are leap years. Every year divisible by 4 is a leap year. Every year divisible by 100 is not a leap year, unless the year is also divisible by 400, then it is a leap year. 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 INDU has closed negative 65% of the time (13 of 20).
5. How has Leap Day closed when the fourth day prior to it has seen the Dow close positive (equivalent currently to Monday 2/25/08 closing positive)? This has only occurred seven times. A few days later on Leap Day, the Dow closed negative 85.7% of the time. FYI, these years were 1928, 1932, 1944, 1956, 1968, 1984 and 1996.
6. Since 1896, how often
have the fourth, third and second days prior to a literal Leap Day 2/29
all closed positive (as currently in 2008)? Only once! It was in 1984. The ensuing days of 2/28 and 2/29 were both negative.
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.