When traders look at their financial calendars, they usually concentrate on the events that are scheduled: macroeconomic announcements, central bank meetings, earnings seasons, and important public holidays. It only makes sense to assume that these are the main factors that drive market actions. However, markets can move aggressively in a way that has no apparent trigger. Volatility increases, and markets become less liquid, with prices seemingly unrelated to the news flow.
Such events are usually attributed to what market professionals refer to as the “shadow calendar” – a series of unscheduled or under-reported events that have a material impact on liquidity, positioning, and price actions. At JMarkets, analysts point out that being aware of the shadow factors can be a crucial advantage, particularly during times when markets act erratically.
Below are some of the key invisible forces shaping market conditions behind the scenes.
1. Corporate Blackout Periods: When a Major Buyer Disappears
One of the more opaque sources of volatility is the blackout period related to corporate earnings. In the weeks leading up to earnings announcements, firms are prohibited from buying back their own shares. Share repurchases have become a significant source of equity demand, especially in the US market.
As the blackout periods start, usually three to four weeks before the earnings announcements and several days after, a major buyer will suddenly be absent from the market. This will make the indices more susceptible to the pressure of selling, and the volatility will rise.
This is especially true at the end of a quarter, when many firms are in blackout periods at the same time. Months such as January, April, July, and October have historically occurred during these times. This means that traders can expect drawdowns to be more severe even without negative macroeconomic news, simply due to a lack of liquidity.
2. Global Holidays That Shift Market Behavior
Though global holidays such as Christmas are considered in trading volumes, many regional holidays may affect global markets in more subtle ways.
A good example of this is the Lunar New Year in China. During this time, industrial production slows down considerably, logistics come to a standstill, and market participation is low. Since China is the world’s largest consumer of many commodities, demand for industrial metals may temporarily dry up, causing unusual price actions that are more a function of market conditions than fundamentals.
Ramadan in the Middle East may affect market participation in oil markets, while the European summer holiday season, particularly August, is known to see lower liquidity in regional assets.
3. Options Expiration: The Hidden Force Behind “Pinned” Prices
Equity and index options expire every third Friday of the month. Quarterly expirations, where more than one derivative expires at the same time, can be particularly volatile.
As expiration draws near, market makers rework their hedge positions to mitigate risk. When prices are close to large option strike prices, hedge positions can anchor prices, leading to the “pinning” effect, where markets seem to be stuck at certain levels despite efforts to break above or below.
Triple Witching Expirations, which occur in March, June, September, and December, can lead to particularly volatile markets in the final minutes of trading. To the inexperienced trader, market action during these times may seem nonsensical.
4. Trade Policy Decisions Outside the Calendar
Modern markets are increasingly influenced by political decisions that do not appear on economic calendars. Tariff announcements, sanctions, court rulings, or sudden policy reversals can trigger sharp moves across currencies, commodities, and equities.
Because these events are unpredictable, they often catch markets off guard. For example, the suspension of trade duties or changes in regulatory measures can instantly shift expectations for global growth, inflation, and capital flows.
5. Index and Fund Rebalancing
Around the end of the month and, more so, around the end of the quarter, institutional investors rebalance their portfolios to adhere to target allocations. If stocks have outperformed bonds during a particular period, they may sell stocks and buy bonds to rebalance their portfolios.
Such activities can cause markets to behave in a manner opposite to the economic story of the day. Strong economic data can occur alongside declining stock prices simply because institutional rebalancing activity drives supply and demand in the short term.
Index changes are also important. When firms are included in or excluded from large indices, passive funds are required to buy or sell their shares in large quantities and within a short period. Such technical flows can cause prices to change irrespective of the fundamentals of the firms.
6. Geopolitical Events Without Fixed Dates
Finally, geopolitical events such as elections, conflicts, changes in policies, and leadership changes can immediately change the market sentiment. Although these events are unpredictable, some trends are observed. Elections in major countries are associated with increasing volatility before and after the election results.
International organization meetings, such as G7, G20, or OPEC+, can also impact the market, although there may be no public agenda.
How Traders Can Work With the Shadow Calendar
Awareness is the first step. Professional traders track option expirations, earnings blackout schedules, regional holidays, and rebalancing periods alongside traditional economic indicators.
Risk management adjustments are also essential. Lower liquidity environments may require smaller position sizes, wider stops, and caution around breakout strategies. Conversely, understanding these dynamics can reveal opportunities when liquidity returns – for example, when buyback programs resume after blackout periods.
Importance of Shadow Calendar for Traders
The shadow calendar is not a mysterious phenomenon but simply a reflection of the fact that markets are driven by capital flows, positioning, and participation levels, in addition to data releases. By understanding these hidden market drivers, traders can better understand price action and not be caught off guard by unexpected volatility.
From the JMarkets analytical point of view, markets are never random. When there is a change in liquidity or the large participants withdraw from the market, the price action will be different. Traders who are able to track what is happening outside the calendar events will have a better understanding of the market structure and will have a definite edge over others.
