The seasonal trade was really working at the start of the month
At the start of April, I wrote about a few seasonal trends in the market to watch out for. The results were decidedly mixed.
The US dollar was a monster in the month, especially in the latter half and that unwound some trades that had a good start.
1) April is the worst month for USD/CAD
Score a win for this one. I wrote that USD/CAD had fallen in 10 of the past 12 years. Make that 11 of 13 as the pair dipped 0.4% in April. That understates how well this trade started out. It was down 2.8% on April 16 before the US dollar stormed back to wipe out most of the loss. That will be a recurring theme in this scorecard.
Verdict: Win.
2) Time for Bitcoin to make a stand?
I wrote that for Bitcoin, the average gain since 2011 has been almost 49% including 21% in 2017. It has been a brutal year for Bitcoin bulls but they can celebrate a 36% rally in April to $9319 from $6900. Is it just me, or was that a very quiet rally?
Verdict: Win.
3) April is the worst month for the dollar
Coming into 2018, the dollar index had fallen in seven consecutive Aprils. Midway through the month, it looked like the streak would extend but then the bond market and the Fed took over. The dollar index was down by as much as 0.8% but climbed in 8 of the final 10 days of the month to finish up 2.1%.
Verdict: Loss
4) April is a good month for global equity markets
Earnings season has been a wild ride and it feels like it's a battle for every inch in stocks and nothing is safe lately in the US. Elsewhere, it wasn't nearly as rocky and the seasonal pattern sparkled.
Here were the markets I highlighted in the post:
- FTSE 100 +6.4%
- Hang Seng +2.4%
- Nikkei 4.7%
- S&P 500 +0.3%
- TSX +1.8%
April is the second-best month for natural gas and coming into this year it had risen for 8 consecutive Aprils. Well, make it nine as natty scored a 1.1% gain in the month. It was up 3.2% through last Thursday but stumbled in the final two trading days of the month. The seasonal bull market continues in May/June but it's a bit more rocky.
Verdict: Win
Final score: 4-1. Honestly, when I set out to score this one, I thought it was going to be reversed. I guess that says something about only focusing on the past week or so, when a few of the trades struggled.
I'll have May seasonals tomorrow.
