Last Hour of Trading: What It Means

After looking at the opens recently, I decided to investigate market performance following strong vs. weak closes. I went back to March, 2003 in the Dow Industrials and examined the last hour of trading and its effect upon the next day.

Overall for the sample, the average daily change in the Dow was .05% (401 up, 356 down). When the last hour of trading was up by .40% or more (N = 82), the market the next day averaged a loss of -.08% (40 up, 42 down). When the last hour of trading was down by .40% or more (N = 80), the market averaged a gain of .20% (48 up, 32 down).

We thus see modest evidence of reversal following weak and strong last hours of trade. As with market opens, we are seeing little evidence that strong or weak closes carry over to the next day of trading. If anything, such moves are more likely to produce retracement than continuation.