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Over the lengthy haul, there’s some alpha to be generated with the assistance of seasonals however February was additionally a reminder that momentum and fundamentals trump all. I warned initially of the month that February was the worst month of the yr for the Nasdaq. Nicely that did not grow to be very helpful because the AI increase continued and the NQ rose 5.1%.
Different seasonal trades that I highlighted did higher.
Oil adopted the seasonal development (which continues via June) with a climb and Chinese language shares rebounded, simply because the Feb seasonals foretold, leaving an interesting-looking candle on the Shanghai Composite month-to-month chart.
Shanghai Comp month-to-month
Cable additionally adopted the seasonal sample with a reasonable loss whereas the Australian greenback and copper weren’t in a position to capitalize on the seasonal tailwind (although it does proceed to blow via March and April).
For China shares, the constructive seasonals proceed in March and April. The truth is, most inventory markets have a constructive backdrop for March and the numbers can be higher if not for the rout in March 2020. The hayday really is available in April, which is the strongest seasonal month of the yr for the S&P 500 and the MSCI World Index.
On the FX aspect, March is the second-strongest month for USD/JPY however in gentle of feedback from the BOJ’s Takata, I’d be extra targeted on fundamentals.
The euro reveals some constructive tendencies each in opposition to the US greenback and on the crosses.
General, it is not an enormous seasonal month however a number of the shine was taken off by COVID in 2020. The true commerce could also be organising for April power, which may coincide with stronger indicators of central financial institution easing.
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