By Nicholas Santiago on March 12th, 2010 3:30pm Eastern Time
Rarely do we have a big sell off day on Friday. Since October of 2008, the major market indexes have only closed down by more than 100 points a hand full of times. We call this phenomenon the "Friday Effect." We are not certain why this occurs, however, we can speculate why this happens and we have several thoughts on the topic.
The reasons we believe Friday seem to hold up so well are:
1. The institutional money that can move the market does not want to cause a panic in the public over the weekend. The weekend is when most consumer have off from work and will spend money. If this economy is going to inflate itself back to some kind of health it will need the U.S. consumer to spend his or her money.
2. Institutional money does not want to cause panic or fear in Asia and Europe leading into Monday when the U.S. markets resume trading. Most heavy or sharp Monday declines and panics started with a very weak Friday.
If you look at today's action, the market is basically flat. So far the 'Friday Effect' looks to be working its usual magic.
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