What Is The Best Day To Buy Apple For A Gap-Up At The Open?

| About: Apple Inc. (AAPL)

In this article, I looked at the intraday price moves in Apple (NASDAQ:AAPL) by day of the week. I wanted to follow up by looking at what happens to the stock overnight each day, to see if there are trends that investors can take advantage of.

In researching the first article, I discovered that all of the net gains for AAPL from January 1, 2011 to present took place overnight, from the close of NASDAQ trading up the open the following morning, due to the tendency of the stock to gap up on many days.

I was able to determine a clear pattern in intraday trading, in that even though the stock didn't move much intraday over the entire year, there was significant difference by day of the week. I was requested to follow up on whether there was a similar pattern in overnight trading by day of the week.

In the period studied, AAPL increased by $143.19, but actually had net gains of $155.42, if you skipped intraday trading and bought at the closing price and sold the following morning at the open.

A couple of caveats:

  • It won't always possible to get the exact opening and closing prices. There is likely enough margin of error here in the price movements that getting close will still provide value.
    • This strategy requires daily trading, which will require a daytrading account and significant commission costs.
AAPL net gap up at open
Day of Week Net Gain/Loss from prior close
Monday $19.51
Tuesday $24.32
Wednesday $77.33
Thursday $10.77
Friday $23.49

Looking at the data, there isn't much of a variance between the days except for Wednesday. Taking a close look, the reason Wednesday is out of line is that Apple reports earnings on Tuesday night. Wednesday morning has been good, but not nearly as good if you take out some big gains (and one loss) following earnings.

The takeaway? Over the year, it's always been a good idea to hold AAPL overnight, and it does not matter greatly which day of the week. Daytrading in the stock when the market is open has been hit or miss, but grabbing the gap up has been a solid strategy. For those that still think AAPL has room to run (which seems to be almost everyone) smart trading can mean even greater profits over a simple buy and hold strategy.

Disclosure: I am long (AAPL).