Forget Trump rally: ASX in middle of its sweet spot thanks to Pope Gregory XII

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This was published 7 years ago

Forget Trump rally: ASX in middle of its sweet spot thanks to Pope Gregory XII

By Michael Pascoe
Updated

Don't thank Trump for the Australian stock market rally, try Pope Gregory XIII instead.

It's the 16th century pope's Gregorian calendar that's delivering for investors who bet on rising share prices in January, according to Bell Potter's Richard Coppleson.

Coppleson has been going back through the numbers for his Coppo Report to confirm that we are in the middle of the ASX's sweet spot – the three months to the end of April, before the "sell in May and go away" cliché hits.

Over the 17 years of this century, betting on a rising ASX 200 for the April quarter worked 76 per cent of the time and produced an average gain of 2.99 per cent.

It's the 16th century pope's Gregorian calendar that's delivering for investors who went long in January.

It's the 16th century pope's Gregorian calendar that's delivering for investors who went long in January.Credit: Dallas Kilponen

In the four years that the April quarter was down, the average loss was 1.79 per cent, but the 13 winning years by themselves produced an average gain of 4.47 per cent. And 2017 is running nicely to form.

Coppleson found that February is generally a good month for the market, March is better and April is best.

Over the past 36 years, the average ASX 200 move for April has been a gain of 2.79 per cent.

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The worst month has not been October – generally thought of as the month of headline crashes. It's June that's been the worst performer, down 0.7 per cent on average, followed by November with 0.28 and then October on 0.17. In the shorter time frame of this century, October has actually been the best month on the ASX, averaging a gain of 1.7 per cent, ahead of April's 1.59.

I'm not a believer in astrology, numerology, Pauline Hanson or tea leaf reading, so it's reassuring that Coppleson offers a fundamental basis, not just graph paper coincidences, for the April quarter's strong run.

He points to the February reporting season kicking it off with improved corporate results, followed by portfolio repositioning in March and April, plus the billions of dollars in dividends that are paid out in those two months, much of which looks for a way to get back into the market.

The worst year this century for the April quarter was 2002, when the ASX dropped 3.32 per cent. The star performer was 2009 with a 7.1 per cent rally. The last time the quarter failed to rally was in 2008, when it pulled back just 0.79 per cent.

"Being 'net long the market' these three months has been a huge winner in the last eight years without a loss," says the report. "Since 2009, the three months have been up 100 per cent of the time with an average gain of 4.72 per cent."

Nearly half-way through this sweet spot, the ASX 200 is up 2.2 per cent. Enjoy the next month and a half.



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