Let’s find some strong seasonal patterns in stocks in the US financial sector using the Seasonax screener function which automatically generates a list of the most promising investment opportunities.
- Firstly, choose S&P500 Financials as your market. With the Fed expected to hike rates aggressively to counter a surge in inflation financials typically gain in this environment. Higher interest rates typically mean higher interest rate charges for loans and that should increase the profitability of financial companies.
- Secondly, set your limits. Let’s look at seasonal patterns for the past 15 years starting March 02. Set the minimum and maximum time period that you want to hold the instrument ranging from 31 to 60 days.
- And as an optional last step, we can select the filter that will screen your results and remove all patterns with lower rates of winning trades.
We can see that over the last 25 years, American Express has risen 17 times!
Major Trade Risks:
- Any large falls in US inflation will reduce the Fed’s need to raise interest rates so aggressively.
- Any bad news for American Express can also weigh on its share price.