Of course as we have said before it is a strange index,
distorted by a few companies ( 4 make up over 50%) but we’ll carry on
regardless.
2017
The first three months of 2017 show indications of an
increase in trade. There are some factors which tend to undermine the index and
a requirement to adjust the composition to protect value.
The longer term undermining continues in the second quarter
with some depression of values.
This period may also see some surprises for investors, leading
to more volatility than we have seen in the last year or so
The themes continue in July to September but they seem more
background than immediate then.
The final quarter is much more active. While there are still
both surprises for investors and elements that drag the market down, there may
also be a sudden increase in trading around October and a particular focus on
the market towards the end of the year an even a temporary rapid uptick in
value
January to March of 2018 is more mixed. Investor surprises
continue, but the conditions supressing value are reducing. On balance there
may be much ado about nothing and the market end the quarter more or less where
it began.
April to June, however, see the beginning of a new long term
phase for the index and initially this
seems broadly positive, although there is still some switching and other
adjustment to be made.
July to September is a very mild period. Any movement is
likely to be upwards – but it won’t be dramatic.
October to December sees a return to the frantic pace of
late 2017.
There are less shocks now though, at least in October and
November when there seems to be a major tension between the direction of value
of the individual components
December is a month of more excitement when all eyes may be
on the index.
January to march 2019 is once again positive. The trend in
the market seems to be moving towards upwards, although there are still some
concerns dragging things down.
April to June, however, sees a bigger change of emphasis.
First there is more trade and a push to high values. But this is also the
beginning of a critical 12 months or so when the fundamentals are either
ignored or unclear.
July to September sees these themes intensify. There are
shocks for investors as well as rapid trading. However there is also some
protection in the form of a stabilising influence that will prevent things
getting completely out of hand
The final quarter of 2019 is key. Although there will be
difficulties for some investors, and indeed for the index proprietors here
seems to be enough to prevent either melt up or melt down even in the face of
some “interesting conditions”
2020
January and February 2020 still see confusion over the fundamentals,
but although it may a tricky period for investors, the general trend is for
relative stability and continued support for the index.
March To June are more mixed, but again there is support.
Probably running the index is more problematic than holding it now.
July to September is more mixed. There may be some shocks
which destabilise things and there may be undue focus on this index at that
time- perhaps difficulties with a major component, overall though there is
still some positive sentiment.
Indeed October and November see the likelihood of a boost,
although once again the situation is more troubling for the index proprietors again than the
investors, who are feeling extremely positive.
December confirms that positive mood, but there are some
sudden trades which might pull the rug from under some investors. The year ends
with what is probably a significant switch of components rather than an overall
index value trend.
Comments