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

Min-Yuh Day, Paoyu Huang, Yirung Cheng and Yensen Ni
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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

International Journal of Information Technology & Decision Making (IJITDM), 2023, vol. 22, issue 06, 1893-1921

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.

Keywords: COVID-19; technical trading rules; stock markets; momentum strategies; contrarian strategies (search for similar items in EconPapers)
JEL-codes: G02 G11 G14 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1142/S0219622023500025

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