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On Monday, January 17, 2011 the NYSE is closed in observance of Martin Luther King, Jr. Day, celebrated on the 3rd Monday in January and being an exchange holiday since 1998, a relatively recent addition. But since its addition to the list of exchange holidays, the stock market regularly looks to an "unfavorable season" during the week starting with Martin Luther King, Jr. Day.

Table I below shows all occurrences, the S&P 500's performance during Martin Luther King, Jr. Day week ( 1 to 4 sessions ), and the maximum gain and maximum drawdown - on a close to close basis - during the period under review, assumed one went long on close of the session immediately preceding Martin Luther King, Jr. Day in the past (like on close of January 14, 2011).

+ no close below trigger day's close during period under review
- no close above trigger day's close during period under review

Probabilities and odds for a higher / lower close one and two sessions later (Tuesday to Wednesday next week) are more or less evenly distributed, but are heavily tilt in favor of the downside at the end of Martin Luther King, Jr. Day week (day #4). The S&P 500 closed at a higher level at the end of the week on only 4, and up 1.0%+ only once, but lower on 9 occurrences, and down -1.0%+ on 7 occurrences. The median weekly change since addition to the list of exchange holidays is -1.41%, and the S&P 500 did not manage a single close above the previous' end-of-week close during Martin Luther King, Jr. Day week on 4 out of those 13 occurrences.

Conclusions:

If the market is really 'due' for a short-term correction, the next week might provide a favorable (seasonal) opportunity for the bears.

Successful trading,