A Market Turnaround: Why Stock Prices Gains Exponentially Overnight Than During Trading Hours
In the intraday financial markets, stock prices typically decline when the market closes, primarily because prices have not passed their all-time high on the day. However, this phenomenon reverses on the weekend—during Saturday or Sunday, stock prices rebound significantly at the close before opening the next day. This exponential rise is the most dramatic and overlooked trait of the stock market. Why does this behavior occur? It appears to be the result of two competing explanations: (1) large quantitative investors exploiting market inefficiencies to push prices up, and (2) retail investors trading via select stock picks.
The phenomenon of dramatic overnight gains has been receiving wide attention, yet many remain unexplained. Over the past decade, large quantitative investors have thrown stockholm’s estimable range, but none have apparently hinted the same extent of gains overnight. New evidence from recent analysis suggests that both explanations contribute to the phenomenon. On day-of-week anomalies, the data show that Tuesday and Thursday mark the days with the largest overnight gains. This could be linked to quantitative investors pushing prices up when liquidity is low before the market opens on these days. As more stocks open, buyers will_handsome to buy up positions already held, driving prices up.
The meme stocks phenomenon, identified by neuroscientist Victor Haghani, Vladimir Ragulin, and Richard Dewey, offers another angle. Retail investors are likely engaging in this pattern when they are asleep, after working and trading during the day. The argument cites the 2022 HiPE conference and its ranking as "a surprising and highly relevant example of the post-rational stock market." These stocks attract tinkering scrutiny and short-term trades.
Despite extensive analysis by the author, there is no conclusive confirmation of day-of-the-week patterns explaining overnight gains. The author also attributes both explanations to comparison studies with non-meme stocks, which do not exhibit such clear patterns. However, the token differences between meme and non-meme stocks are noteworthy, with a fourfold difference in price volatility. However, no consistent data links unrounded interactions with stockpicked meme stocks to overnight gains._micro MongoDB data.
Meme stocks, evident from recent trading patterns, suggest a widespread pattern of buying stocks during the day after working but before opening. This phenomenon is not seen with non-meme stocks, whose intraday price behavior lacks such clear anomalies. While there are deviations, these differences could point toward other explanations, such as the impact of stock picking duringTests, possibly skewing prices.
