Monday Effect

DEFINITION of 'Monday Effect'

A theory that states that returns on the stock market on Mondays will follow the prevailing trend from the previous Friday. Therefore, if the market was up on Friday, it should continue through the weekend and, come Monday, resume its rise.

BREAKING DOWN 'Monday Effect'

Some studies have shown a similar correlation, but no one theory has been able to accurately explain the existence of the Monday effect.

RELATED TERMS
  1. Weekend Effect

    A phenomenon in financial markets in which stock returns on Mondays ...
  2. Cyber Monday

    An expression used in online retailing to describe the Monday ...
  3. Green Monday

    The second Monday in December, which is one of the most lucrative ...
  4. Calendar Effect

    A collection of assorted theories that assert that certain days, ...
  5. Dow Theory

    A theory which says the market is in an upward trend if one of ...
  6. Biased Expectations Theory

    A theory that the future value of interest rates is equal to ...
Related Articles
  1. Markets

    What Happened On Black Monday?

    On October 19, 1987, the Dow Jones dropped 508 points, or almost 22% in a single day. That was Black Monday.
  2. Trading

    7 Controversial Investing Theories

    We take a closer look at the theories that attempt to explain and influence the market.
  3. Trading

    Capitalizing On Seasonal Effects

    We show you how to take advantage of periodic trends in the equity markets.
  4. Trading

    Modern Portfolio Theory vs. Behavioral Finance

    Modern portfolio theory and behavioral finance represent differing schools of thought that attempt to explain investor behavior. Perhaps the easiest way to think about their arguments and positions ...
  5. Trading

    Dow Theory: Current Relevance

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.comThere is little doubt that Dow theory is of major importance in the history of technical analysis. Many of its tenets and ...
  6. Investing

    Making Sense Of Market Anomalies

    Stocks sometimes thwart the efficient market theory by showing some very unusual patterns.
  7. Markets

    China Roars Back, Oil Gains on Production Freeze

    Asian stock markets roared back this week.
  8. Trading

    Dow Theory: Conclusion

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.comDow theory represents the beginning of technical analysis. Understanding this theory should lead you to a better understanding ...
  9. Trading

    Manipulating Facts to Fit a Theory: A Dangerous Trading Practice

    This practice is common with experienced and new traders, and it can lead to huge losses. Find out how to avoid it.
  10. Investing

    Efficient Market Hypothesis

    An investment theory that states it is impossible to "beat the market".
RELATED FAQS
  1. What are the differences between weak, strong and semi-strong versions of the Efficient ...

    Discover how the efficient market theory is broken down into three versions, the hallmarks of each and the anomalies that ... Read Answer >>
  2. What is the chaos theory?

    The chaos theory is a complicated and disputed mathematical theory that seeks to explain the effect of seemingly insignificant ... Read Answer >>
  3. What's the difference between agency theory and stakeholder theory?

    Learn how agency theory and stakeholder theory are used in business to understand common business communication problems ... Read Answer >>
  4. Which of the following statements is least accurate with respect to the various ...

    The correct answer is: b) The tax preference theory simply argues that capital gain return results in a higher after tax ... Read Answer >>
  5. Do real estate agents work on weekends?

    Learn how working weekends and evenings is one way real estate agents increase their chances of making a sale to a potential ... Read Answer >>
  6. What is Black Monday?

    Monday October 19,1987, is known as Black Monday. On that day, stockbrokers in New York, London, Hong Kong, Berlin, Tokyo ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center