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ERROR: type should be string, got "https://www.barrons.com/articles/the-halloween-rally-stock-nightmare-before-christmas-51572014344\nThe Halloween Rally Isn’t a Stock Nightmare Before Christmas\nAl Root\nUpdated October 31, 2019 / Original October 25, 2019\nStocks perform well on Halloween. Photograph by David Menidrey\nGaining an edge on the stock market is hard. The market is supposed to be efficient—distilling all available information into stock prices instantaneously. But there are some stock-market curiosities that are difficult to explain by fundamentals alone—and which aggressive traders can try to exploit. Call them the market’s supernatural phenomena.\n“Sell in May and go away” is one of those strange market trends. The adage describes the market’s tendency to underperform in the summer and outperform in the first and fourth quarters of the year. There’s no deeply fundamental reason stocks should be seasonal, but they are.\nThe “Santa rally” is also a thing on Wall Street. That describes the tendency of stocks to rise around Christmas. Maybe investors are in a good mood around the holidays. Stifel’s head of institutional strategy Barry Bannister points out recessions are rare and when investors look ahead into next year, the outlook for earnings—more often than not—is rosy. That’s one alternative explanation for December’s strong historical stock-market performance.\nTurns out, Halloween is another one of those curiosities.\nTrick-or-treating, of course, is just around the corner—right in the middle of third-quarter earnings season. Halloween is actually a treat—a great day for stocks.\nAccording to Dow Jones Market Data, the S&P 500 rises an average of 0.19% on Halloween, the Dow Jones Industrial Average gains an average of 0.15%, and the Nasdaq Composite Index gains an average of 0.43%. The Nasdaq isn’t even the best of the bunch. The small-capitalization Russell 2000 index rises an average of 0.65% on Halloween.\nGains of a fraction of a percent may not seem impressive, but stock gains on any given day are a coin flip. Stocks tend to rise over time, but the average one-day return is a fraction above zero. Relatively speaking, the Halloween results are, well, scary.\nWhy stocks rally on Halloween is a mystery. Perhaps there is no new information because companies avoid reporting results on Oct. 31.\nThat’s not the case for 2019, as Halloween is one of the busiest days for third-quarter-earnings reports all year. Typically, Wednesdays and Thursdays are the most popular days to report earnings and more than 30 S&P 500 companies will report numbers next Thursday on Oct. 31.\nThe UBS Chief Investment Office doesn’t have an explanation for the Halloween outperformance, but it did offer investors some advice in a recent research report for the upcoming pseudo-holiday, popular with kids.\n“According to Dr. Mathias Clasen of Aarhus University—a self-proclaimed ‘horror researcher’—our ancestors evolved fear responses to help them remain hypervigilant to danger,” reads the research report.\nSuch over-attentiveness can lead investors to move too quickly and trade too much, potentially hurting returns, according to UBS. Instead, investors are better served by conducting portfolio stress tests and considering worst possible outcomes to avoid overreacting when markets sell off.\nStress-testing and underreacting is sage advice “because drawdowns are much rarer and more short-lived than market rallies,” wrote UBS.\nRead More Trader\nThe S&P 500 Closed Out the Week Strong — but Not Strong Enough\nWalmart Stock’s Continuing Gain Could Be Linked to Procter & Gamble\nThat means it is a bad idea to overreact to corrections. Investors are more likely to sell at the bottom if they do that—one surefire way to tank stock-market returns. It’s a better to have a plan for the drawdown in advance, when investors are thinking rationally and then stick to that plan before more-primitive, fear-motivated minds, can betray them.\nOne other stock-market implication for Halloween is trading volumes could tail off at the end of the day. Everyone has to get home to knock on doors for candy with the family.\nLast year our children went as a book, jellyfish, and ghost. This year, ninja, fox, and burrito costumes are planned. Have a Happy Halloween.\nWrite to Al Root at allen.root@dowjones.com\nGaining an edge on the stock market is hard."