It may be cold outside, but individual investors have really warmed up to stocks in a big way.  According to the weekly sentiment survey from the American Association of Individual Investors (AAII), bullish sentiment increased to 59.75% from 52.65% last week.  If that sounds like a high reading, that’s because it is! Not only is this the third straight week where bullish sentiment has been above 50%, but it’s also the second highest reading in bullish sentiment of the bull market!  The only week that saw a higher reading was back in December 2010 when it reached 63.3%. After stubbornly resisting the rally for several years now, individual investors are getting close to all in.

So where are all the bulls coming from?  Based on the chart below, it looks like they are coming right from the bearish camp.  As shown below, bearish sentiment dropped from 20.63 down to a paltry 15.56%.  The only week where bearish sentiment was lower was in November 2014 when it dropped to 15.05%.

Jobless claims rose for the third straight week, rising to 250K from last week’s level of 247K.  That was 10K above the consensus forecast of 240K and the highest weekly print since 11/10/17.  Even with three straight weeks of increases, though, jobless claims are nowhere near 300K, which is a level they have been below for 148 straight weeks now.

With the recent increases, the four-week moving average of claims has been ticking higher the last two weeks to its current level of 241.25K.  That’s 10K above the cycle low of 231.25K that we saw back in early November, but given the recent trends in claims, it doesn’t look like we will be getting back down there anytime soon.

On a non-seasonally adjusted basis, jobless claims rose by 27K to 351.9K.  While that’s well below the average of 505.6K for the current week of the year dating back to 2000, NSA claims were actually slightly lower at this point last year (350.6K) than they are now.

The US stock market has begun 2018 on a very positive note with the S&P 500-tracking SPY ETF up 1.3% YTD already.  But stock markets outside of the US are doing even better so far this year.  Below we provide snapshots of regional and country ETFs from our extremely useful Trend Analyzer tool that’s available at the Bespoke Premium and Bespoke Institutional level.

As shown in the first snapshot below, regional ETFs have moved sharply higher within their normal trading ranges.  All but one (Europe hedged) are trading in overbought territory, with the large majority at extreme levels (>2 standard deviations above their 50-DMAs).  Emerging markets ETFs like EEM, ILF, IEMG, and VWO are leading the way with YTD gains of 2%+ already.

Below is a snapshot of country ETFs tracked using our Trend Analyzer tool.  Here again, all but a few are now extremely overbought.  The three China ETFs are up the most YTD with gains of 4%+, and Brazil (EWZ) is up 4% as well.  Russia (RSX) — 2017’s worst performing country ETF — is up 3.65% already in 2018.  The only country that hasn’t joined the party yet is Indonesia (EIDO), which is down 18 basis points on the year.  Even with its small year-to-date decline, EIDO is still up over 1% over the last 5 trading days dating back to the end of December.

Start using our popular Trend Analyzer tool now with a 14-day free trial to Bespoke Premium!

After a two-month pullback from the highest levels of the cycle, the ISM Manufacturing report for December showed a nice rebound.  While economists were forecasting the headline number to come in at 58.2, which would have been unchanged from November, the actual reading came in at 59.7, and that’s the third highest monthly reading of the recovery.

A look at this month’s commentary also shows more of the same, as sentiment is unequivocally positive.

Below we break out this month’s ISM Manufacturing report by its various subcomponents.  Whether you look at a m/m or a y/y reading, breadth in the report was extremely positive. The only two components that were down relative to November were Customer Inventories and Employment, while only Customer Inventories declined on a y/y basis.  Relative to last month, the real standout was New Orders, which rose from 64.0 up to 69.4.  That’s the highest reading for this component since January 2004, and before that period, you have to go back to the early 1980s to find a period when this component was higher.

Forget about Lexus.  It was definitely a “December to Remember” for sales of Ford F-Series trucks. Sales totals from Ford for December were just released, and the results were strong.  As shown below, total sales of F-Series trucks came in at 89.4K for the month which was the best December since 2005 and the third best December since 1996.  Trucks are not only higher margin, but they are often purchased by small businesses and contractors so they provide a good read on the health of the small business sector. Based on these sales totals, small businesses are expanding.

With December’s numbers in the books, total sales of F-series trucks for all of 2017 came in just shy of 900K at 897K.  That’s up nearly 10% from last year.  It was the 4th best year for F-series since 1996 and the best since 2005.

Bespoke co-founder Paul Hickey appeared on CNBC’s Closing Bell on Tuesday to discuss the market’s strong start to the year.  To view the segment, click on the link below.