The Profitability of Technical Trading for Hotel Stocks Under COVID-19 Pandemic

Abstract

In the real world, investors believe that they can receive more returns for trading stocks by utilizing technical analysis. However, due to the seriously worldwide breakout of COVID-19 from 2020, investors are not sure if they could outperform the market by applying the technical trading rules during this severe period. Thus, we conduct this study to investigate the profitability of stock trading with the use of technical indicators under COVID-19 pandemic. By trading the constituent stocks of Hotel Stock 20 Index (HSI 20) whose stock prices seem considerably declined after the outbreak of COVID-19, we discover that most of the trading rules utilized in this study fail to beat the market in the first half of the year 2020. The findings of this study may shed light on that investors should adopt technical trading rules with care when stock markets are severely affected by black swan events, such as COVID-19. We argue that the above issue would be rather impressive not only for market participants to avoid losses, even make profits, but also for the existing literature due to the rare discussion in the past.