January mostly bucked the seasonal trend but one trade held up
January 2018 seasonals review
An unusual January followed an unusual December. Risk assets were pounded in December in what is traditionally a strong month while they rebounded in January in what's usually a poor month. It's a good example of using seasonal patterns as only one part of the puzzle.
The Canadian dollar was the top performer in the month, up 3.8% against the US dollar. At the start of the month I noted that the past two Januarys had also bucked a trend of seasonal CAD weakness to start the year. It's now safe to say that trend is dead.
One trend that remained very much in fashion was buying gold to start the year. I've written about it year and year and it continues to be my key to starting the year with gains. Gold climbed 3.2% in January and is up more than 8% since the start of December.
Looking ahead, February is another strong month for gold but be warned that the first half of China's lunar new year holiday week tends to be soft so waiting for a dip to buy may be prudent.
I'll be writing more about February seasonals tomorrow but one to watch is oil. Crude is generally weak in January but it was extremely strong this month. I don't think the rally in oil is over because there is a long period of seasonal strength ahead.