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.

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.

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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!

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.

Bespoke co-founder Paul Hickey appeared on Bloomberg TV earlier today to discuss the markets, economy, and the FOMC.  To view part of today’s appearance, please click on the image below.

With each passing day that the market goes up, investors are increasingly asking “how much longer can the rally last?”  Well in today’s early trading, even after the rebound we have seen off the earlier lows, there is at least one sign that some investors are looking to ring the register on their winners.  We grouped the Russell 1000 into ten deciles (10 groups with 100 stocks in each) based on how individual stocks performed from the Inauguration through yesterday’s close.  As shown in the chart below, the stocks that have done the best are down an average of 0.83% so far today.  Relative to the other deciles, this is nearly twice as much as the decline in the next closest group (decile ten).  Additionally, just 20% of the stocks in decile one are trading higher today.  That too is the weakest breadth reading of the ten deciles.