The Weekend effect in the Stock Market

The weekend effect or Monday effect is a phenomenon that has affects small cap stocks more than it affects large cap stocks.

This states that the returns on Monday are significantly lower than the returns on any other day of the week, the majority of the loss on Monday normally occurs during the weekend.

This has been tested and debated many times over the last few decades. In fact a study was done on this affect by the Federal Reserve that found prior to 1987 there was a statistically significant negative return over the weekend.

The theories for this range from companies waiting until Friday and the weekend to announce their bad news, to fading investor optimism over the weekend.

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