At the end of 2016 we put together a list of stocks that stood to benefit the most from the new “Trump Economy.”  With the first half of the year coming to an end next week, our list of stocks is performing nearly exactly in-line with the S&P 500 on a year-to-date basis.  We didn’t construct this list as a “Buy” portfolio, but rather as a way for clients to generate ideas based on which of Trump’s proposals they thought had the best chance of actually getting done.

Of the stocks in the Trump Portfolio, it’s the Technology stocks that have done the best this year — AAPL, CHKP, GOOGL, TWTR, and V.  Other big winners have been Tesla (TSLA), McDonald’s (MCD), Anthem (ANTM), Elbit Systems (ESLT), Cemex (CX), SQM de Chile (SQM), CyrusOne (CONE), and the Geo Group (GEO).  Health Care stocks like HCA, Ligand (LGND), and Zoetis (ZTS) have all done well too.

The biggest losers have been names like the Andersons (ANDE), Cal-Maine (CALM), Chesapeake (CHK), Diamondback (FANG), Endo (ENDP), Granite Construction (GVA), and Freeport (FCX).

We’ll check back in to see how performance looks at the end of the third quarter in September.

Who said Tech was dead?  While concerns towards the Technology sector have increased following the late afternoon swoon in tech stocks two weeks ago, shares of Oracle surged over 8% on Thursday following a strong earnings report after the close on Wednesday.  That rally in reaction to earnings was the stock’s best earnings reaction day since March 2009 and the fourth biggest one-day gain following earnings since the dot-com crash.  With Thursday’s rally, shares of ORCL also traded to all-time highs well above the levels it reached during the 2000 bubble.

Just as impressive as ORCL’s performance yesterday, the stock also traded at the most extreme short-term overbought level it has traded in its history.  ORCL closed 5.6 standard deviations above its 50-day moving average yesterday, which exceeded its previous most extreme levels by a mile.  When looking at stocks relative to their 50-day moving averages, three standard deviations typically counts as pretty stretched.  Occurrences where a stock trades four standard deviations above its 50-day don’t come by very often, but five is practically unheard of!  Now, just because a stock reaches extreme overbought or oversold levels doesn’t mean it has to reverse course.  Instead, it just serves as an indication of how far the stock’s current price has deviated from its typical range.  In the case of ORCL, what also sticks out is the fact that less than a year ago, the stock traded at its most oversold level since just after its IPO in 1986.

It’s been a pretty uneventful week in the markets, so not surprisingly, bullish sentiment was little changed as well.  According to the weekly survey from AAII, bullish sentiment increased from 32.27% up to 32.65%, extending the current record streak of weeks below 50% to 129.  More recently, over the last sixteen weeks, there have been only four weeks where more than a third of investors were bullish.

While bulls have been scarce, bears haven’t been running rampant.  In this week’s survey, bearish sentiment was pretty much unchanged at 28.91%.  Believe it or not, this is the third week where bearish sentiment was below 30%, which is the longest streak of the year.  As shown in the chart below, the trend of higher bearish sentiment that began in late 2016 has definitively been broken.

Jobless claims for this week came in higher than expected, but the margin was as small as it could possibly be.  While economists were looking for claims to come in at a level of 240K, the actual reading came in at 241K.  There wasn’t much that really stuck out in this week’s report that was new relative to prior weeks, just that claims have now been below 300K for 120 straight weeks and below 250K for the third straight week.  We may have become numb to it with week after week of low readings, but it’s still pretty extraordinary. In terms of the recent trends in claims, current levels are right near the low end of their recent downtrend range.

The four-week moving average ticked up 1.5K this week, rising to 244.75K.  That’s now nearly 10K above the cycle low of 235.5K that we hit in mid-May.

On a non-seasonally adjusted (NSA) basis, claims declined from 234.2K down to 228.5K.  For the current week of the year, that is the lowest since 1973 and nearly 110K below the average of 337.9K since 2000.

We’re happy to announce that the newest episode of Bespokecast is now available to the general public both here and via the various podcast platforms.  Be sure to subscribe to Bespokecast on your preferred podcast app to gain access to our full collection of episodes.  We’d also love for you to provide a review as well!

In our newest conversation on Bespokecast, we talk to Louis Navellier, the founder of Navellier & Associates.  Louis has been writing about the stock market since the early 1980s, and his firm offers a range of services for clients including portfolio management, advisory, and mutual funds. Louis brings a unique and highly quantitative approach to investing, and has from the very start of his work on market efficiency and factors which drive outperformance. We discuss in depth his entry into the industry, the approach he uses in analyzing the markets, and his detailed views around ETFs and their impact on liquidity and volatility. Louis had a number of interesting perspectives on the relationship between yields and equity prices as well as monetary policy. We hope you enjoy the conversation!

Each new episode of our podcast features a special guest to talk markets with, and Bespoke subscribers receive access before it’s made available to the general public.  If you’d like to try out a Bespoke subscription in order to gain access to these podcasts in advance, you can start a two-week free trial to our research platform.  To listen to episode 13 or subscribe to the podcast via iTunes, GooglePlay, OvercastFM, or Stitcher, please click the button or links below.

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