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Something strange happened to Apple (AAPL) on Friday, August 17th: the stock closed the week with a large one-day gain. Apple closed the day with a 1.9% gain. Of the 16 days performing better this year, only one was a Friday (6.3%). For comparison, of the 254 days performing better since 2007, 41 were on Fridays (16%). AAPL has developed a pattern where, on average, it starts the week strong and ends meekly. The following chart shows the average daily return for AAPL for each day of the week over different time frames.

(click to enlarge)

Apple's Average Daily Price Change

Note the consistency over the years in Friday's relatively poor performance. Also notice that this year, the divergence is most pronounced. AAPL is up a whopping 60% year-to-date, so it makes sense that the average daily price changes on positive days are much larger this year than in previous years. However, I am surprised that Friday tends to be a down day (on average) AND is performing no better than the averages from previous years. Thursday is not much better on a relative basis.

This view came from a discussion I had with a friend about Apple's apparent tendency to start the week with exceptionally strong performances. He confirmed my anecdotal observations with some data on Mondays over the past several months. Next, I applied my template for examining the daily performance patterns of the S&P 500 (see "S&P 500 Performance By Day Of Week And The Changing Nature Of Trading Tuesdays") to AAPL. The interesting patterns did not end with the average daily performance.

Following a down day, Monday's suddenly lose their allure while Thursday and Friday continue their poor relative performance.

(click to enlarge)

Apple's Average Price Change Following A Down Day

Once again, including data from Apple's entire trading history significantly whittles down the differences amongst the days (I will save discussion of statistical significance for another day).

When the previous trading day is a down day of -1% or worse, the relatively poor performance of Thursday and Friday really stand out. The chart below is truncated because Wednesday's average greatly dominates the other days with an average 4.9% performance. There were only 23 trading days in 2012 with down days of -1% or worse, only three of these were Tuesdays. The price performance of the following Wednesdays were -0.4%, 6.2%, and 8.9% (4/11, 1/25, and 4/25 {a post-earnings day} respectively).

(click to enlarge)

Apple's Average Price Change Following A Down Day of -1% Or Worse

Finally, after an up day, Monday's strong performance really stands out. So, for example, after Friday's 1.9% performance, I am expecting another strong day this coming Monday. Including data over all Apple's trading history levels out differences across the days with the one oddity that the average Friday turns negative. A tendency that is not erased until the last two years.

(click to enlarge)

Apple's Average Price Change Following An Up Day

Source of price data for all charts: Yahoo!Finance

So why does any of this matter? After all, Apple has returned to all-time highs, a happy place where every single person who has bought and held onto Apple's stock is making money.

I think these data matter most for the numerous traders buying and selling Apple's options, especially the weeklies. I believe Apple's high stock price encourages more trading in options. On Friday alone, 100,866 calls expiring August 24th traded against an open interest of 19,739. 57,667 puts traded against an open interest of 16,803. These weeklies were created just one day earlier. However, together, these weekly options that traded on Friday represent 15.9 million shares. This is significant for a stock with a rolling 3-month average of 14.2 million shares traded. Coincidentally(?), Apple traded 15.8 million shares on Friday. These numbers are enough to make me wonder whether day-to-day trading in Apple is truly all about the options! (Granted, last Friday may be distorted due to the expiration of "regular monthly" options).

(click to enlarge)

Apple breaks out to fresh all-time highs on a closing and intraday basis

Source: FreeStockCharts.com

When I noted Apple's breakout from the post April earnings high, I wrote the following:

"On Monday, August 6th, AAPL broke out from a short trading range defined at the bottom by the psychologically important $600 level and at the top by the April post-earnings high. This breakout symbolizes the neutralization of whatever worries prevented buyers from taking AAPL higher after April's earnings and motivated sellers to take down AAPL after July earnings…

…The dissipation of selling interest and increase in buying pressure should propel AAPL higher at a swift clip."

The heavy trade in call options seem to make Apple's launch to higher heights even more likely. The current surge in call buying volume is very similar to the surge that occurred near the beginning of Apple's tremendous three-month run-up to start 2012 (see Schaeffer's Investment Research chart of Apple's volume put/call ratio and click on the two-year view). This run-up also started with a breakout to fresh all-time highs but from a wide 6-month trading range.

Be careful out there!

Source: A Guide For Day-To-Day Trading In Apple's Stock