Years Like 2017: March Edition
It’s hard to believe that we’re already fifty trading days into the year, meaning that 2017 is already just about 20% in the books. The best way to characterize 2017? We’d say “so far, so good.” With a gain of 6.5%, 2017 ranks as the third best start to a year in the last ten years, behind both 2012 and 2013, and in both of those years, the index finished the year higher than it was on 3/15. Today, we wanted to take this one step further and look at past years that started off looking the most similar to 2017.
To that end, as we do throughout the year, we analyzed years where the S&P 500’s closing prices had the greatest correlation to the closing prices so far in 2017. Then, for each year, we provided a summary including the correlation coefficient between closing prices for that year to the S&P 500 YTD through 3/15, how the S&P 500 performed YTD in each year through 3/15, and then how the index performed over the remainder of the year, including maximum gains and losses from the 3/15 closing level.
While history doesn’t always repeat itself exactly, patterns in the market have a way of repeating themselves, which makes this analysis extremely interesting as well as useful. To see the report, sign up for a monthly Bespoke Premium membership now!
Jobless Claims Inline; Still Low
Remember back in 2014 when jobless claims first crossed below 300K and it was considered a major deal? These days, not so much. Not only is sub-300K expected, but sub-250K has now become the norm. In the latest week, first-time claims dropped by 2K down to 241K, which was pretty much right in line with consensus expectations for a reading of 240K. With this week’s print, jobless claims have been below 300K for 106 straight weeks and below 250K for seven. Things continue to look solid in the labor market.
Although weekly claims dropped slightly, the four-week moving average increased from 236.5K up to 237.25K, which is just 3K above the current cycle low of 234.25K from three weeks ago.
On a non-seasonally adjusted basis, jobless claims fell by 21.5K down to 222.5K. For the current week of the year, you have to go back to 1969 to find a lower reading. Additionally, since 2000, the average for the current week of the year is nearly 120K higher (340.5K).
Philly Fed Retreats But Still Ahead of Estimates
After an insanely positive increase in last month’s headline index, the Philly Fed Manufacturing Index of Current Business Conditions retreated this month but still managed to beat expectations. While economists were expecting the headline indices to retreat from a multi-decade high of 43.3 down to 25.0, the actual decline was smaller at 10.5 points, bringing the index down to 32.8. To put this in perspective, outside of last month’s blowout reading, the current level would still have been the highest reading since November 2014.
Although the headline index declined this month, every one of the index’s sub-components saw a m/m increase in March. Going back to 1980, there have only been three other months where the General Business Conditions Index declined, but every other component rose. Those occurrences were in May and September of 1996 and December 2003. In order to see just how much things have changed in the last few months regarding the Philly Fed report, below we have charted each of the individual components listed in the table. Yes, it is ‘soft’ data, but there has been a virtual sea change in sentiment.
Little Increase in the Bullish Camp
The latest sentiment figures from AAII were released earlier this morning, and as has been the case for years (yes, years!), bulls are still far from a majority. Heck, at current levels they aren’t even at a third of the total! After falling to a post-election low of 30% last week, bullish sentiment increased a measly 1.17 percentage points to 31.17%. This marks a record 115 weeks where bulls have been out of the majority. We’ll be the first to agree that overall market sentiment hasn’t been as positive as it has during prior bull markets, but this continued lack of bullish sentiment in the AAII survey seems like an outlier.
While bullish sentiment saw little in the way of a bounce, bearish sentiment saw a sharp decline, falling from 46.5% to 38.7%, which was actually the largest weekly decline since early October.
With all of those investors leaving the bearish camp but not ready to commit to the bullish side, ‘neutrals’ ballooned up to 30.13%. With that increase, all three camps are once again bunched up in the 30% decile. Individual investors just need to make up their minds already!
ETF Trends: US Sectors & Groups – 3/16/17
In the wake of the Fed’s dovish hike yesterday we’ve seen a “rally in everything”. Indeed, only 15 of the more than 200 ETFs we track were down over the past week. Gold miners and EM were some of the biggest winners while Energy and Oil are down over the past week thanks to big moves lower in WTI up until yesterday.
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.
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B.I.G. Tips – Death by Amazon – 3/16/17
Chart of the Day: Lithium Love
the Bespoke 50 — 3/16/17
Every Thursday, Bespoke publishes its “Bespoke 50” list of top growth stocks in the Russell 3,000. Our “Bespoke 50” portfolio is made up of the 50 stocks that fit a proprietary growth screen that we created a number of years ago. Since inception in early 2012, the “Bespoke 50” has beaten the S&P 500 by 38 percentage points. Through today, the “Bespoke 50” is up 113.8% since inception versus the S&P 500’s gain of 75.6%.
To view our “Bespoke 50” list of top growth stocks, sign up for Bespoke Premium ($99/month) at this checkout page and get your first month free. This is a great deal!
The Closer — Fed Steals Third — 3/15/17
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Looking for deeper insight on global markets and economics? In tonight’s Closer sent to Bespoke Institutional clients, we recap the Fed’s decision to raise rates for the third time this cycle. Included is analysis of the statement and Chair Yellen’s press conference as well as 6 pages of charts to fully recap intraday asset price moves in response to the decision. We also update our coverage of inflation with analysis of the CPI report from today.
The Closer is one of our most popular reports, and you can sign up for a free trial below to see it!
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Global Equities Back to Overbought
US equities posted nice gains following the Fed’s rate hike this afternoon. The same was true for country ETFs outside of the US. Both the Russian stock market (RSX) and the Mexican stock market (EWW) posted gains of 3%+ today.
Below is an updated look at our trading range screen for the 30 largest country ETFs traded on US exchanges. For each country, the dot represents where it’s currently trading, while the tail end represents where it was trading one week ago. The black, vertical “N” line represents each country’s 50-day moving average, and moves into the red or green zones are considered “overbought” or “oversold.”
A week ago, only 7 of 30 country ETFs in our screen were trading in overbought territory, but after today’s move, that number is back up to 23 of 30. Pretty much all regions of the world are extended well above their 50-day moving averages again. South Africa (EZA), Spain (EWP), France (EWQ), and South Korea (EWY) are four of the most extended.
Just 5 country ETFs are currently below their 50-days — Canada (EWC), Colombia (GXG), Russia (RSX), Thailand (THD), and Vietnam (VNM) — and just 2 of those 5 are oversold (Colombia and Russia). And even though Russia is still oversold, it has seen a huge jump higher within its range over the last week, just like pretty much every other country.
