Author(s) :

Stavyaa Girish.

Volume/Issue :

Abstract :

This paper investigates the presence of anchoring bias in stock markets through an analysis of trading volume behavior at prices near the 52-week high. Anchoring bias, originally introduced by Tversky and Kahneman as a cognitive heuristic, is defined as agents’ tendency to apply reference points—usually arbitrary or externally generated—to make judgments in conditions of uncertainty. In f inancial markets, the 52-week high is a reference point that can influence the behavior of investors more than fundamentals necessitate. Using the daily price and volume data of five S&P 500 leaders— Apple, Microsoft, Alphabet, Amazon, and Nvidia—this research focuses on the calendar year 2024. Unlike conventional definitions of the 52-week high, which may be based on intraday trades, this study only used closing price data in the calculation, representing a methodological distinction from prior work. Anchor days were defined by a price-based rule: a day on which the close was within 1% of the then-existing rolling 52-week high. A two-tailed t-test was used to test whether mean trading volume meaningfully differs on anchor and non-anchor days. By emphasizing trading volume rather than price reactions, this paper introduces a novel behavioral measure of investor attention and conviction. The f indings hold broader implications for understanding how cognitive anchors shape liquidity, volatility, and market efficiency.