February chart image

There is bad news on the seasonal front as we enter February, it's the second-worst month for the S&P 500 over the past 100 years and the third-worst since the millennium. For the Nasdaq, it's the worst month since 2000. However there is strong evidence behind that adage of 'as goes January, so goes the year' and with a decent gain last month, it bodes well for 2024 as a whole.

CIBC chart
CIBC chart

Seasonal trades for February:

1) The turn in oil

Oil certainly followed the weak seasonal pattern in November and December before rising modestly in January. Starting in late February there is a strong seasonal pull for oil that runs through May. Yesterday, US numbers revealed that demand has been stronger than weekly numbers suggested while OPEC continues to pull on inventories. With growth holding up so far, there's a case for buying a dip in the first three weeks of the year.

crude oil seasonality

2) Some positives for the Australian dollar

The RBA is beginning to look like an outlier on monetary policy but AUD has been dragged down by poor sentiment in China and commodities. Seasonally, February is a decent month for AUD on a few fronts and it starts a nice run of seasonal strength in AUD/JPY that runs through April.

3) China rising?

It's been a dismal run for Chinese stocks but the lunar new year holiday period is traditionally good for the Shanghai Composite. It's the second best month for the index, averaging a 2.19% gain since 2000. Last year, even in the midst of a brutal four-month period the index gained in February.

Shanghai Comp monthly

4) See the doctor

With China strong, it's no surprise that it's also the strongest month of the year for copper. It's gained in 12 of the past 16 years in February.

5) Worst month for cable

February is the worst month on the calendar for the pound, though only narrowly worse than May and August. It's fallen in give of the past seven Februarys, including a 300-pip decline last year.

It's a leap year and for what it's worth, the average change in the S&P 500 on February 29 is -0.06%.