February seasonal scorecard: Some big wins
How did seasonal trades work in February
Did February follow the usual seasonal pattern?
At the start of the month I wrote about five seasonal patterns. Here is a look at how they did.
1) The start of a strong run for oil
I highlighted that February is the strongest month of the year for oil over the past 20 years. It delivered once again with a sensational 19.5% gain
2) The end of the gold run
What I wrote:
I always highlight buying gold in December in anticipation of the run through February. Lately, I believe gold is being front-run early in the period and sold in February. Today is a decent pop for gold but I'd be wary of chasing it too deep into the month.
That was good advice as gold's peak for the month came on Feb 1. It was unchanged MTD through Feb 9 but has tumbled since, finishing the month down 7%.
3) Cable creaks
What I wrote:
February is the third-weakest month over the past 20 years and there was plenty of softness there pre-covid. In the bigger picture, I believe GBPUSD is in a long-term bull market so the two options are long or the sidelines. So the trade would be to find a dip in February to buy.
The first week of Feb was soft for cable but it only gave up 100 pips so there wasn't a great dip to buy. Those who bought it or were long were rewarded with a 250 pips monthly rally even after the sharp selloff in the past two days.
4) AUD strong period
I highlighted that the Feb-April period is a good one for AUD. AUD/USD rallied nearly 400 pips into yesterday's high, which was just above 0.8000. Since then it's given back much of the monthly gain but is still up 0.4%.
5) Stock watch
I noted that Feb is the second-weakest month for the S&P 500 going back to 1920 and that it's particularly true in the first year of a Presidential cycle. Despite the ugly end to this month, it wasn't true in Feb 2021, with the S&P 500 up 3.7% MTD. I did also highlight that Nikkei 225 seasonals were strong and that market rose 4.7%.
I will have a report on March seasonals up later today.