Sell S&P 500 Into Weekend on This Pattern, Susquehanna Says

(Bloomberg) -- It might make sense to lighten exposure to U.S. stocks over the weekend due to a trading pattern that’s emerged in recent weeks, according to Susquehanna Financial Group LLLP.

“Sell the close, buy the open?” strategist Chris Murphy wrote in a note Thursday. “This has been an effective strategy when geopolitical concerns have overshadowed domestic concerns.”

Murphy points to trade war headlines in 2019 and this month’s coronavirus outbreak to bolster the case. The latter has helped drive the SPAR S&P 500 ETF Trust “up 2.7% during the U.S. trading day and down 1.4% during the overnight session.”

Sell S&P 500 Into Weekend on This Pattern, Susquehanna Says

Numerous factors may be at play, including the fact that news reports about the trade war and coronavirus have emerged during Asian trading hours, or overnight in the U.S. Asia stocks have underperformed U.S. equities during the period Murphy cites: The S&P 500 rose 2.9% from Dec. 18 through Thursday, while the MSCI Asia Pacific Index declined 2.6% from the same date through Friday’s session.

“If you believe this trend will continue, it makes sense to lighten long exposure, particularly into the coming weekend with the potential for more coronavirus numbers over the weekend,” Murphy wrote.

©2020 Bloomberg L.P.

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