A Summer of Discontent, or a Summer of Opportunity?

LONDON, May 30, 2012 /PRNewswire/ --

Do the summer months offer opportunities for active investors?

Traditional wisdom says bull and bear markets play out over time, yet there are distinct seasonal trading patterns that can create trading opportunities in any given year.

Many investors shy away from the markets throughout the summer months, but an analysis of seasonal trading patterns reveals that significant trading opportunities often present themselves. These opportunities could increase returns and decrease risk for those willing to take a more active approach to investing.

Commenting on this year's markets to date, Colin Cieszynski, Senior Market Analyst from CMC Markets, said:

"The year started out strong with sizable gains for many markets from January through March. It appears that the usual spring selloff came early this year, however, as all of the indices  except the ASX were flat or lower in April. Seasonal weakness has continued in May, exacerbated by weaker economic data out of China and the US.

"The attempts by European policy makers to strike a balance between fiscal responsibility and growth could weigh on markets through June but have the potential to sow the seeds for a summer rebound depending on the results of the Greek election and EU summit meeting scheduled for later in the month."

A look at monthly returns for a number of major indices over the last quarter-century shows that, generally speaking, markets build upward momentum through the first part of the year with April tending to be particularly strong. May and particularly June tend to be weaker followed by a rebound in July. The August to October period tends to be the poorest time of the year for stocks which then tend to finish the year strong with a rebound in November and December.

    Average Monthly Return 1987-present
    Month     Dow       S&P/TSX   FTSE      DAX     Nikkei  S&P/ASX
                        60                                  200
    January     0.37%   - 0.57%   - 0.22%     0.31%   0.31%     1.10%
    February    0.38%     0.61%     0.79%     1.13%   0.58%   - 0.85%
    March       1.13%     1.08%     0.33%     1.04%   0.63%     0.63%
    April       2.48%     0.91%     2.07%     3.10%   1.80%     2.11%
    May         1.16%     1.94%     0.42%     0.85%   0.32%   - 0.40%
    June      - 0.64%   - 0.23%   - 0.94%     0.75% - 0.80%     0.11%
    July        1.70%     1.14%     1.16%     1.70%   0.01%     0.64%
    August    - 1.02%   - 2.51%   - 0.24%   - 2.36% - 1.42%     0.10%
    September - 0.97%     1.13%   - 0.88%   - 3.20% - 1.79%   - 0.42%
    October     0.52%     0.13%     0.26%     1.39% - 1.21%     0.39%
    November    1.29%     0.76%     0.47%     1.74%   0.02%     0.08%
    December    2.02%     4.00%     2.70%     2.75%   1.11%     2.31%

               Source: CMC Markets

Colin Cieszynski added: "Later in the summer, even if there is market volatility in Europe, some focus is likely to shift toward the US presidential election where the balance between spending and taxation is likely to be a major issue. After the election, fiscal policy moves to front and centre with decisions needed before the end of the year on whether or not to extend tax cuts and on a new debt ceiling deal before automatic spending cuts kick in."

He concluded: "All of the political activity and on-going economic trends could keep markets active this summer and right through to the end of the year, potentially creating opportunities to those willing to embrace more active approaches to trading and investment."

CMC Markets offers indices trading  from around the world including all of the ones mentioned in this report. With CMC Markets its just as simple to go short as it is to go long, enabling you to quickly switch between positions and take advantage of changing market conditions. The cost to change positions is very low as we only charge the spread between bid and ask prices on indices with no additional commission charges on top. Index trading is available on a 24 hour basis during the business week between Sunday afternoon and Saturday morning depending on where you live. This enables you to trade when it is convenient to you and to take advantage of developments as they happen anywhere in the world.

Notes to Editors

CMC Markets is a leading global provider of financial spreadbetting, CFD and foreign exchange (FX). Since Peter Cruddas founded CMC Markets in 1989, the company now services more than 80,000 clients worldwide, who placed approximately 30 million trades last year.

With offices in London, Paris, Milan, Madrid, Vienna, Sydney, Tokyo, Toronto, Beijing, Auckland, Oslo, Stockholm and Singapore, CMC Markets represents clients in over 70 countries.

CMC Markets UK Plc and CMC Spreadbet Plc (collectively known as CMC Markets) are authorised and regulated in the UK by the Financial Services Authority.   For further information on CMC Markets please visit http://www.cmcmarkets.co.uk

The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

SOURCE CMC Markets UK Plc