Strong seasonals coming up for the Nikkei
One of the concerns in the stock markets is that this strong run in world indices since 2020 should come to an end. Or at least a pullback. This post here summarises that position and how commodities may be signalling a correction after registering its fastest climb in 40 years. See here. The concern right now is that a faster than expected US recovery will bring forward rate hikes. This is pushing yields higher quickly which in turn is weighing on equities.
However, the timing for this pullback is key. When I posted this on Monday I was prompted by one of our valued readership that 'sell in May and go away' would be the logical time for such a correction. However, the recent run off in stocks may be that start of a correction . use key technical trend lines to manage risk.
The conditions are just so easy that dips should find buyers. Low interest rates, high QE, central banks both intervening to keep the yield curve low and being keen to be seen to not move before the Fed all point to more gains. Any problems in stocks markets will only find support from both central bank monetary policy and Government fiscal stimulus. Buy the dip remains the play. However, the extent of the dip still remains unclear. Use technicals to balance the play.
The Nikkei is coming up to a strong period from Mid March through to 01 May. It is well worth taking a look. See here for more seasonal data.
