The Thanksgiving holiday arrives next week and with comes a shortened trading week. While the Thanksgiving trading week is abbreviated, the S&P 500 historically performs well around the holiday and there are sector-level opportunities for traders of exchange traded funds to consider.
“Thanksgiving-week outperformance has been due to the day before Thanksgiving and the day after. The Wednesday before Thanksgiving has been positive 80% of the time, averaging a gain of 0.31%. The day after Thanksgiving has averaged a 0.27% return over the past 50 years, while being positive 70% of the time,” according to Schaeffer’s Investment Research.
Historical data suggest the aerospace and defense and retail sectors are among the groups that perform well around the Thanksgiving holiday. If that scenario holds true, it could bring needed relief for the SPDR S&P Retail ETF (NYSEArca: XRT), the largest retail ETF, which has been struggling for much of this year.
Adding to the concern for an ETF such as XRT is the fact that the broader consumer discretionary sector, which includes retail, is in the middle of its seasonally strong period. In fact, there are another six or seven weeks remaining in the strongest period of the year for the discretionary sector, but XRT is languishing. The broader consumer discretionary sector is sporting a double-digit year-to-date gain.
XRT features exposure to the following retail industries: Apparel Retail, Automotive Retail, Computer & Electronic Retail, Department Stores, Drug Retail, Food Retailers, General Merchandise Stores, Hypermarkets & Super Centers, Internet & Direct Marketing Retail, and Specialty Stores.