Combining Seasonality With Sentiment

At the beginning of each month we like to take a look at upcoming seasonal influences and see if there might be some opportunities for markets that tend to rise this time of year and might be seeing a sentiment extreme at the same time.

Last month, it looked good for several commodities like natural gas and the grains, while gold, silver and sugar were seeing optimism in a seasonally negative time of year.

For April, cotton and energy contracts are looking more promising, along with the British Pound (why there would be seasonal influences in currencies is less understood). Sugar still looks questionable, with relatively high optimism and still-negative seasonality.

Among ETFs, April is a consistently positive time of the year for equities so there are few negatives, even as the daily optimism figures are extremely high for several of them. Among those showing pessimism, country funds dominate the list, especially Japan (EWJ) which has gotten hit hard in recent days.