Not a bad quarter for the bulls.  With Q1 now officially in the books, 2017 has gotten off to a great start with the S&P 500 rallying 5.7% through late Friday afternoon.  As shown in the sector performance chart below, Technology did most of the heavy lifting this quarter with a rally of 12.4%, or more than double the S&P 500’s gains.  Behind Technology, Consumer Discretionary rallied 8.2%, while Health Care gained 8%.  On the downside, the only two sectors that were down on the quarter were Energy (-7.2%) and Telecom Services (-4.8%).  Besides these two sectors, others that underperformed during Q1 were Financials, Real Estate, Industrials, and Materials.

The tables below list the best and worst performing stocks during the quarter.  Of the 21 stocks that gained more than 25%, shares of NRG Energy (NRG) rallied more than 50%, while Vertex Pharma gained 48%.  With Technology leading the market higher, it shouldn’t come as too much of a surprise that eight of the top performing stocks in the index were from that sector, led by Activision Blizzard (ATVI) and Micron (MU) which both added more than 30%.  How good a year has 2017 been for equities and Tech in general?  Even Xerox (XRX) is up over 25%!

To the downside, the table below lists the 30 stocks in the S&P 500 that traded down more than 10% this quarter.  Leading the way lower, L Brands (LB), Under Armour (UA), and Signet (SIG) all lost more than a quarter of their market value during Q1.  Along with those three names, another six stocks from the Consumer Discretionary sector made the list.  The only sector with more stocks on the list of losers was Energy. Given that it was the worst performing sector during the quarter, Energy makes sense, but Consumer Discretionary was the second best performing sector.  The reason Consumer Discretionary fared so well even with so many stocks in the sector declining sharply is due in large part to Amazon.com (AMZN).  With a gain of 18% and a market cap of around $425 billion, AMZN was responsible for one-third of the Consumer Discretionary sector’s gain in Q1.

With a gain of 5.78% so far in the quarter and just one trading day left in it, the S&P 500 is on pace for a pretty solid Q1.  Given the gains we have seen, it’s ironic that all quarter long investors have been bombarded on a near daily basis with headlines proclaiming an end to the rally.  A 5%+ gain is a 5% gain.  Looking ahead to the final day of the quarter, we wondered how the market tends to close out the quarter following a strong run.  Do investors keep buying or do they take profits?

To shed some light on that question, we looked at every quarter during the current bull market where the S&P 500 was up 5% or more heading into the last trading day to see how the S&P performed on the final day.  Even though we only looked at the current bull market, we found plenty of quarters that met the criteria. During the 32 quarters so far in this bull market, the S&P 500 was up over 5% QTD heading into the last day of the quarter half of the time (16 quarters).  Looking at the results, there’s a pretty convincing case to be made that traders don’t continue piling into the market.  Of the fifteen prior quarters we looked at, the S&P 500 was down on the final trading day of the quarter 12 times for an average decline of 0.39%.  Perhaps it’s due to investors re-balancing out of some of their winning asset classes and into losing asset classes, but during the current bull market at least, there hasn’t been a lot of buying to be found on the last day of a quarter where the S&P 500 was already up 5%.

With Q1 winding down in the next two days, we thought it would be a good time to review the performance of the S&P 500 since Donald Trump was elected last November and play a quick game of “Guess the Chart.”  As shown in the chart below, the S&P 500 rallied hard following the election, traded sideways for several weeks, and then rallied into early March before backing off the rest of the month.  Even after the pullback, though, the S&P 500 is still up just under 11% and not far from its bull market highs.

The next chart also shows performance from Election Day through the end of Q1.  This mystery chart has seen a similar but much more volatile pattern than the one of the S&P 500 above.  Like the S&P 500, it rallied following the election, traded sideways for several weeks, and then spiked higher into early March before backing off its highs towards the end of March.  Can you guess the chart?

Give up yet?  The “Mystery Chart” above isn’t from Election Day 2016 through now, but instead from Election Day 2008 through the end of Q1 2009.  We also forgot to mention that it is upside down.  Can you guess it now?  It’s actually the inverse of the S&P 500.  It’s not a surprise that the market has seen such different reactions between late 2008/early 2009 and now.  Circumstances couldn’t have been more different on just about every measure, but if you are a bull, going forward you have to hope that the differences in performance end here.  Below is the real (non-inverse) version of the S&P from Election Day 2008 through Q1 2009.