The Bespoke Report — 2/17/17

The screen below is one of many graphics included in our just-published Bespoke Report newsletter (included weekly with all of our membership packages).  It shows the recent performance of various asset classes using our key ETF matrix.  Note that the Mexico ETF (EWW) is up more than any ETF in the entire matrix since Trump’s Inauguration on January 20th!

If you’d like to read our thoughts on recent performance plus the rest of this week’s Bespoke Report newsletter, take advantage of our one-month Bespoke Premium free trial offer that includes our 2017 Outlook Report.  Sign up now at this page.

Have a great weekend!

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The Closer 2/17/17 – End of Week Charts

Looking for deeper insight on global markets and economics?  In tonight’s Closer sent to Bespoke clients, we recap weekly price action in major asset classes, update economic surprise index data for major economies, chart the weekly Commitment of Traders report from the CFTC, and provide our normal nightly update on ETF performance, volume and price movers, and the Bespoke Market Timing Model.

Sample

The Closer is one of our most popular reports, and you can sign up for a trial below to see it and everything else Bespoke publishes free for the next two weeks!

Click here to start your no-obligation free Bespoke research trial now!

ETF Trends: Fixed Income, Currencies, and Commodities – 2/17/17

Israel continues to outperform along with Solar, Bioetch, and Pharma. Turkey, the Netherlands, and Brazil also outperformed. On the losing side of the slate, natural gas prices have continue to drag lower while Energy-related equities plunge. Russia also suffered a painful week along with Indonesia and Mexico.

Bespoke provides Bespoke Premium and Bespoke Institutional members with a daily ETF Trends report that highlights proprietary trend and timing scores for more than 200 widely followed ETFs across all asset classes.  If you’re an ETF investor, this daily report is perfect.  Sign up below to access today’s ETF Trends report.

See Bespoke’s full daily ETF Trends report by starting a no-obligation free trial to our premium research.  Click here to sign up with just your name and email address.

Leading/Coincident Indicator Rises In January

In January, the Conference Board’s Leading Indicator for the US economy rose 0.6% MoM versus 0.5% MoM expected.  While the absolute change in the Leading Indicator was certainly positive, we prefer to look at how the Leading Indicator performs relative to the coincident indicator index.  The level of this reading isn’t particularly important but its direction is a very good advance warning of approaching recessions.  As shown in the chart below, the ratio between the Leading and Coincident Indicators tends to drop sharply immediately before and during a recession.  Over the last few months, the ratio has started to turn upwards again after a period of stagnation since the post-recession high print of 1.098 in June 2015.  A new high print, which looks quite likely after the 1.097 level printed this month, would be an indicator that recession isn’t likely in the near term.  With a number of other pieces of economic data suggesting a ramp up in business activity and consumer spending, the Leading/Coincident Indicator ratio adds to the case that a recession in US economic activity is still nowhere close.

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One Down, 47 (or 95) Left to Go

Given Monday’s holiday for President’s Day, today’s close will mark the end of President Trump’s first month in terms of stock market returns. Based on where the DJIA is currently trading, it was a very good first month.  As shown in the table below, the DJIA has gained nearly 4% during President Trump’s first month in office.  Somewhat surprisingly, relative to the 19 other Presidents that have assumed office since 1900, the DJIA’s return during Trump’s first month ranks as number six behind Johnson, Coolidge, Taft, FDR, and Bush I.  Perhaps the most surprising performance of the Presidents shown is Johnson and Coolidge, who saw gains of 7.11% and 5.69%, respectively.  The first month of Johnson’s tenure was the month that followed the assassination of a sitting US President (JFK), while Coolidge’s first month followed the sudden death of another sitting President (Harding).  Apparently, the stock market’s ability to shake off shocking political news isn’t just a phenomenon confined to the last 12 months.

First Month

 

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The First 100 Days: An Accessible Rally

It has now been 100 days since President Trump was elected last November and contrasting the headlines and appearance of turmoil in Washington, US equities have seen one of the steadiest and strongest rallies for a newly elected President on record.  Since Election Day last November, the S&P 500 tracking ETF (SPY) is up just under 10%, but what is really interesting about the rally is where the gains have taken place.  The chart below breaks down the returns of SPY between market hours (9:30 AM to 4:00 PM) and overnight returns (4:00 PM through the 9:30 opening bell).  Often, when you see a big market rally, a lot of the gains come from ‘gaps’ where overnight news or events cause the market to open significantly higher, and unless you were long overnight, you miss out on the move.

What is notable about the rally since the election is that the majority of the gains have come during market hours.  As shown in the chart, the cumulative gain of SPY during market hours since Election Day has been a gain of 6.74%.  In other words, if you bought at the open and sold at the close every day, you would be up 6.74% and eliminated any possible risk of holding equities overnight.  Conversely, if you bought at the close and sold at the open every day since the election, your cumulative gain would be 2.7%, which is less than half of the gain from being long during the trading day.  In addition to being one of the strongest and steadiest rallies following the election of a newly elected president, the rally of the last 100 days has also been one of the most accessible too!

Overnight vs market hours

 

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Bespoke Morning Lineup

Highlights

Bespoke’s Morning Lineup is the top pre-market report on Wall Street.  We cover everything you need to know to get your trading day started, including international market moves and events, post-market and pre-market earnings news, upgrades and downgrades, dividends and splits, economic indicators and estimates, big stock movers, market internals and much more.  It’s all presented in the original and concise format that Bespoke is known for so you can digest lots of information quickly and efficiently.

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The Closer — 44 Charts & 2000 Words — 2/16/17

Log-in here if you’re a member with access to the Closer.

Looking for deeper insight on global markets and economics?  In tonight’s Closer sent to Bespoke Institutional clients, we dissect a massive print from the Philly Fed’s Business Outlook Survey, chart up quarterly consumer credit data compiled by the New York Fed, break down monthly residential construction data from the US Census, and take a look at quarterly housing starts by type of structure.

Sample

The Closer is one of our most popular reports, and you can see it and everything else Bespoke publishes by starting a no-obligation 14-day free trial to our research!

Bespoke’s Sector Snapshot — 2/16/17

We’ve just released our weekly Sector Snapshot report (see a sample here) for Bespoke Premium and Bespoke Institutional members.  Please log-in here to view the report if you’re already a member.  If you’re not yet a subscriber and would like to see the report, please start a 14-day trial to Bespoke Premium now.

Below is one of the many charts included in this week’s Sector Snapshot, which highlights our trading range screen for the S&P 500 and ten sectors.  The black vertical “N” line represents each sector’s 50-day moving average, and as shown, all but two sectors are currently above their 50-days.  The S&P 500 and six sectors are now trading in extreme overbought territory.

To see our full Sector Snapshot with additional commentary plus six pages of charts that include analysis of valuations, breadth, technicals, and relative strength, start a 14-day free trial to our Bespoke Premium package now.  Here’s a breakdown of the products you’ll receive.

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Bespoke’s Dow 30 Trading Range Screen

Below is an updated look at our Dow 30 trading range screen.  For each stock, the dot represents where it’s currently trading within its range, while the tail end represents where it was trading one week ago.  The black vertical “N” line represents each stock’s 50-day moving average.  Moves into the red zone are considered “overbought,” while moves into the green zone are considered “oversold.”

As of this writing, 24 Dow stocks are above their 50-day moving averages while just 6 are below.  Of the 24 stocks above their 50-days, 23 are trading in “overbought” territory, meaning they’re extended more than one standard deviation above their 50-day.  Cisco (CSCO) is the most overbought stock in the index, with JP Morgan (JPM), 3M (MMM), and Procter & Gamble (PG) on its heels.

Just three Dow stocks are oversold, and two of the three are blue-chip Energy companies — Chevron (CVX) and Exxon Mobil (XOM).  Both of these stocks have struggled so far in 2017, with CVX down 6% YTD and XOM down 8.7%.

Don’t look now, but Apple (AAPL) is back on top again as the best performing stock in the Dow year-to-date.

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