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Can Investors Profit from Utilizing Technical Trading Rules During the COVID-19 Pandemic?

Author

Listed:
  • Min-Yuh Day

    (Graduate Institute of Information Management, National Taipei University, New Taipei, Taiwan)

  • Paoyu Huang

    (��Department of International Business, Soochow University, Taipei, Taiwan)

  • Yirung Cheng

    (��Department of Management Sciences, Tamkang University, New Taipei, Taiwan)

  • Yensen Ni

    (��Department of Management Sciences, Tamkang University, New Taipei, Taiwan)

Abstract

In the past, it was believed that investors may generate abnormal returns (AR) for trading stocks by employing technical trading rules. However, since the COVID-19 pandemic broke out, stock markets around the world seem to suffer a serious impact. Therefore, whether investors can beat the markets by applying technical trading rules during the period of COVID-19 pandemic becomes an important issue for market participants. The purpose of this study is to examine the profitability of trading stocks with the use of technical trading rules under the COVID-19 pandemic. By trading the constituent stocks of DJ 30 and NASDAQ 100, we find that almost all of the trading rules employed in this study fail to beat the market during the COVID-19 pandemic period, which is different from the results in 2019. The revealed findings of this study may shed light on that investors should adopt technical trading with care when stock markets are seriously affected by black swan events like COVID-19.

Suggested Citation

  • Min-Yuh Day & Paoyu Huang & Yirung Cheng & Yensen Ni, 2023. "Can Investors Profit from Utilizing Technical Trading Rules During the COVID-19 Pandemic?," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 22(06), pages 1893-1921, November.
    • Handle: RePEc:wsi:ijitdm:v:22:y:2023:i:06:n:s0219622023500025
    DOI: 10.1142/S0219622023500025
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    Cited by:

    1. Day, Min-Yuh & Ni, Yensen, 2023. "Be greedy when others are fearful: Evidence from a two-decade assessment of the NDX 100 and S&P 500 indexes," International Review of Financial Analysis, Elsevier, vol. 90(C).

    More about this item

    Keywords

    COVID-19; technical trading rules; stock markets; momentum strategies; contrarian strategies;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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