The holiday season is a unique period in the markets. Every year, traders ask the same questions. Do markets slow down around Thanksgiving.
Are there opportunities for big moves. Does volume drop and does volatility rise or fall. What
happens to options trading when liquidity dries up.
Are there opportunities for big moves. Does volume drop and does volatility rise or fall. What
happens to options trading when liquidity dries up.
Why Holiday Weeks Behave Differently
Holiday weeks are not normal trading weeks. Several consistent factors come into play:
1. Lower trading volume
During Thanksgiving week, participation from large institutions is often reduced. Many professional traders are away from their desks, and this naturally decreases trading volume.
Lower volume does not always mean quiet price action, but it does mean the market becomes more sensitive to the orders that do come in.
2. Mixed volatility conditions
Holiday weeks can show sudden bursts of volatility followed by quiet stretches.
Low volume means fewer resting orders, which sometimes allows price to move in a cleaner manner. A small aggressive buy or sell program can push the market farther than usual.
3. Options pricing becomes unpredictable
Options are directly affected by changes in:
- Volume
- Implied volatility
- Liquidity
- Time decay
During holiday weeks, the following conditions often appear:
- Time decay accelerates due to the shortened week
- Bid ask spreads widen because of less liquidity
- Implied volatility can drop after Thanksgiving as the market approaches year end patterns
This creates an environment where directional trading with options may be less forgiving.
4. Seasonality and investor psychology
Thanksgiving week often aligns with a positive seasonal trend in the overall market. Historically, risk assets tend to hold steady or drift upward as investors prepare for year end positioning.
However, these tendencies are averages, not guaranteed outcomes.
What the Chart Shows About the Last Four Years Thanksgiving Weeks
The last four years on the QQQ weekly chart, the candles show the price percentage move during Thanksgiving week and the week that follows.
Here are the general observations from those marked data points:
1. Thanksgiving week tends to have moderate moves
- Across the four years:
- Some years show mild gains
- Some show smaller pullbacks
- The average move is not extreme
- Thanksgiving is not typically associated with explosive weekly candles.
2. The larger moves often come the week after Thanksgiving
Your chart labels show that in several years, the week after Thanksgiving had a more meaningful push than the holiday week itself.
This makes sense because:
- Liquidity returns
- Institutional trades that were paused resume
- Rebalancing and month end flows increase
3. None of the last four years show a dramatic Thanksgiving move
There are no exceptional spikes or crashes during the holiday week in your sample.
This suggests that Thanksgiving week is not historically a major turning point, but it does sometimes show the beginning of a trend that continues the following week.
Implications for Options Traders
1. Expect wider spreads and faster time decay
Reduced liquidity means options become more expensive to enter and exit.
Theta also accelerates because the market is closed for one or more days.
2. Do not expect large payoffs from short dated contracts
Small weekly candles mean small price ranges, which limits the profitability of zero day or short dated trades.
3. Better opportunities may appear the week after
Because history shows stronger moves after Thanksgiving week, swing traders can plan around this.
4. Risk management matters more
When volume drops, markets can move in unexpected ways.
Stop losses should be clearer and position sizes should be smaller.
Are There Big Moves During Thanksgiving Week
Are There Big Moves During Thanksgiving Week
Based on the past four years :
- There are no extremely large candles
- There are no major crashes
- There are no major breakouts
Thanksgiving week generally produces small to medium range movement.
The bigger follow through often happens right after the holiday.
This is consistent with academic studies on holiday effects and with long term seasonality patterns in the market.
Current Price Action Analysis Based on Your Chart
Current Price Action Analysis Based on Your Chart
Your final chart shows QQQ trading around the 599 to 600 area. The recent weekly candles show:
A strong run leading into the current consolidation
- A pullback from the recent highs
- Sellers stepping in at the upper resistance zone around 620
- Buyers attempting to defend the 590 to 600 support zone
Here is what this structure suggests:
1. The market is in a minor pullback after a strong up move
After a multi week push higher, a cooling period is normal.
The recent red candles reflect profit taking rather than a confirmed reversal.
2. Price is currently sitting on a key support zone
The 590 to 600 area has acted as a reaction point before.
If buyers hold this level, the market may attempt another move higher.
3. A break below this support could indicate a deeper correction
If QQQ closes a weekly candle under 590 with strength, the next area of interest is the 560 to 570 area.
4. If buyers reclaim momentum, the next target is the recent high
A bounce from this level would likely target:
- 620
- Then 635
- Then a retest of the highs above 640
5. Thanksgiving week expectations
Based on the historical behavior and current structure:
- Expect smaller candles
- Expect limited volatility
- Expect a possible transition candle rather than a directional candle
- The real move is more likely to show up the week after Thanksgiving
6. Trend direction is still upward until key support breaks
Even with the pullback, the larger weekly structure suggests the trend remains intact.