Futures Now

Why February could see strong market gains, despite heated political climate

Despite the headlines, Bespoke’s Hickey says bull market is intact
What Bespoke sees as biggest risk to market
Bespoke’s Hickey reveals top February plays

Many traders have been quick to say the so-called Trump trade could be over, but market rallies don't usually end when everyone is saying they will, according to Bespoke Investment Group co-founder Paul Hickey.

The analyst believes February's strong historical performance during bull markets will continue despite the heated political climate that has raised doubts about the sustainability of this uptrend.

"The end of January has historically been weak over the last several years," Hickey said Tuesday on CNBC's "Futures Now," noting an overwhelming number of business news stories suggesting the Trump rally was over. "When you do see those kinds of headlines, most market peaks and rollovers are usually not so unanimous in the headlines."

The ended January on a four session losing streak. Yet the major indexes in January still finished higher. Hickey argues that February could add to those gains.

Since 1985, during bull markets, February has averaged a gain of nearly 3 percent, with positive returns 83 percent of the time, according to Hickey.

The analyst's research shows that February typically starts off on a positive note and then keeps rising through the middle of the month. By the end of the month, a sideways pattern usually emerges.

Hickey predicts the consumer discretionary area and materials could be among the best ways to play the seasonal pattern this year.

"Since 2010, it [consumer discretionary] has been up every February and going back to '85 it's been up nearly three-quarters of the time, average gain of over 2 percent," he said

Hickey says materials have come in positive 70 percent of the time in February over the past 30 years. In the years when there's a Republican controlled Congress and White House, it's the only sector that has outperformed 100 percent of the time.