Several white papers and other publications in respected journals (e.g., the Harvard Business Review) have pointed to higher returns around a new moon and lower returns around a full moon.
Find out if this strategy is still working and the securities for which it appears to work the best.
- Are Investors Moonstruck? Lunar Phases and Stock Returns
Download the paper on stock price returns around new and full moons released by researchers from the University of California (Irvine), the London School of Economics (LSE), and the Australia National University (ANU).
- Lunar Cycle Effects in Stock Returns
Download the paper released by University of Michigan researchers regarding stock price returns around new and full moons.
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New Moon and Full Moon
A new moon takes place when the moon is in between the Earth and the Sun (i.e., the Moon and Sun would be "conjunct" from the Earth's "geocentric" perspective). During a new moon, the moon is typically not visible to the naked eye.
A full moon takes place when the moon is on the opposite side of the Earth relative to the Sun (i.e., the Moon and the Sun would be in "opposition" to each other).
Higher Returns Around a New Moon vs. a Full Moon
'Are Investors Moonstruck?' White Paper
In 2001 researchers from three universities released a paper that stated, "The findings indicate that stock returns are lower on the days around a full moon than on the days around a new moon. The magnitude of the return difference is 3% to 5% per annum."
'Lunar Cycle Effects in Stock Returns' White Paper
In the same year two researchers from the University of Michigan released a paper that concluded, "We find strong lunar cycle effects in stock returns. Specifically, returns in the 15 days around new moon dates are about double the returns in the 15 days around full moon dates. This pattern of returns is pervasive; we find it for all major U.S. stock indexes over the last 100 years and for nearly all major stock indexes of 24 other countries over the last 30 years."
Harvard Business Review - Market Lunacy
The November 2006 issue of Harvard Business Review included an article that summarized the results of the study mentioned above that was conducted by two University of Michigan researchers. The article commented that "While these findings are, admittedly, a bit off the beaten path, they're the product of rigorous research."
CXO Advisory Group - Lunar Cycle and Stock Returns
In October 2011 CXO Advisory Group released its own research following up on the work mentioned above that was performed by two University of Michigan researchers.
Based on its own research, CXO Advisory Group concluded that its "results are in rough agreement with the conclusion of the study" which included "intervals centered on new moons outperforming those centered on full moons."
However, one nuance noted by CXO Advisory Group was that the greatest excess returns took place for the 5 days of trading centered on the date of the new moon (i.e., 2 days before the new moon, the new moon date, and two days after the new moon). The excess returns were especially high when compared to the 5 days of trading centered on the date of the full moon.
CXO Advisory Group's research also noted that its "results consistently indicate that that the waxing moon (new-to-full) interval on average outperforms the waning moon (full-to-new) interval.
The CXO Advisory Group noted that not all researchers agree that returns are higher during new moons relative to full moons, including research performed by Physicist Charles Pennington. However, the CXO Advisory Group concluded its own research by stating, "In summary, evidence from simple tests indicates that the U.S. stock market since 1990 performs better on average around new moons than full moons, and during waxing moons than waning moons."
Historical Returns Around New Moons and Full Moons
The table below illustrates the the actual historical returns for several securities in the days surrounding new moons using data through the end of August 2018.
With the exception of Bitcoins and the VIX, the rest of the securities generated greater returns around historical new moons than they did on average during the rest of the lunar cycle.
The lower return for the VIX during new moons is not unexpected because the VIX tends to decrease when the S&P 500 increases. Therefore, higher returns for the S&P 500 around a new moon would be associated with lower returns for the VIX around a new moon.
The relatively short trading history for Bitcoins could be a factor that is leading to returns not being as high around a new moon.
In the table above, the days around historical new moons that generated the highest returns for each security are highlighted in yellow (e.g., the new moon date plus or minus two days for Crude Oil - WTI).
Right above each of the securities in the table above there is also a listing of the number of days before and after the new moon that generated the highest returns for a certain security (e.g., "+- 2 Days" for Crude Oil - WTI).
The graph below illustrates the return differential between the returns for each security around a new moon (e.g., plus or minus two days for crude oil - WTI) compared to the average daily return for each security.
The table below illustrates the average return for each day of the 28 day lunar cycle for several additional securities.
The values for the NYMEX Light Sweet Crude Oil Futures below are based on a relatively short amount of data (i.e., from 11/16/2012 through 8/31/2018), whereas the data above for Crude Oil (WTI) is based on a larger data set (i.e., 1/2/1986 through 8/31/2018). This could be the factor driving the difference between returns for oil around new moons.
The graph below illustrates the return differential between the returns for each security around a new moon for several additional securities.
Based on this analysis, certain securities have historically generated a higher return around new moons than they did during the rest of the lunar cycle.
See below for a link an Excel file with an analysis of various lunar metrics including security price returns around a new moon.