The FTSE 100 is entering a strong patch according to its last 10-year seasonal pattern. In the last 10 years, the FTSE 100 has risen a total of 7 times out of 10. The largest gain was last year with a strong +7.91% increase. The largest loss was -7.84% in 2012.

There are a number of factors that would support FTSE 100 gains over the coming month. The UK is expecting a strong economic bounce back with a fast vaccine roll-out programme. The Scottish National Party failed to get an overall majority, so that means the chance of a successful Scottish referendum is, although still possible, less likely. A large amount of pent up savings in the UK of around £150 billion are now poised to be released into the economy and could send the FTSE 100 higher this month.

Will the strong seasonals and fundamental outlook send the FTSE 100 in May?

Trade Risks:

• Over the long term, May tends to be a weak seasonal month for stocks. However, recently FTSE 100 stocks have been quite well supported during May.
• The main risk to this trade is from any risk-off tones which may pull equity markets lower.