Bullish stock market sentiment from individual investors spiked immediately following Trump’s victory last November.  There was a thought that this might mark the beginning of a new trend, but the bounce was short-lived.  At this point, AAII bullish sentiment (which is reported weekly) is back down to where it was a couple of months before the election.  This week’s bullish sentiment reading came in at 32.8%, which is up a point from where it stood last week.  It appears as if the steep post-election rally that has taken the Dow up to 20,000 has individual investors concerned about stocks going “too far, too fast.”  But that means that sentiment should start to increase again if we see a pullback.  Unfortunately, sentiment readings don’t tend to work that way.  Any market decline will likely get investors even more cautious.

With 32.8% bullish, 33.03% neutral, and 34.17% bearish, individual investor sentiment couldn’t get more evenly distributed.  No wonder the market has been trendless with no upside or downside momentum experienced in weeks.

After jumping from 237,000 up to 260,000 last week, weekly initial jobless claims came in at 246,000 this week.  That was 4,000 lower than the consensus of 250,000 that economists were expecting.

Jobless claims continue to come in remarkably low.

Below is a chart showing the 4-week moving average of weekly initial jobless claims.  This helps to smooth things out.  As shown, the current 4-week moving average stands at 248,000.  Since 2000, the average of this 4-week moving average has been 366,000, so we’re currently 118,000 below that level.

The above readings have been seasonally adjusted, so what was the actual non-seasonally adjusted number this week?  As shown below, it came in at 278,700.  That means the seasonally adjusted number was adjusted down by roughly 30,000 this week.  But if you look at the non-seasonally adjusted reading for this week of the year going back to 2000, the average has been 401k.  So this week’s non-seasonally adjusted number was 123,000 below average.  It was also the lowest reading for this week of the year seen since at least 2005.  Pretty solid.

You would think that with all the headlines over the past month suggesting political chaos in Washington, it would have been a volatile January for stocks.  With the first month of the year now in the books, though, it was among the most stable Januarys in terms of market performance we have seen in quite some time.  For starters, the largest drawdown that the S&P 500 saw from a closing high during the month was just 0.85%, which is the smallest since last July.

Even more impressive, though, was the S&P 500’s average daily percent change in January of just +/-0.33%.  In the 1,069 months since 1928, January ranks as the 66th smallest average daily move for a given month in the S&P 500’s history.  For the month of January specifically, there have only been five other Januarys where the S&P 500 saw an average daily percentage move that was smaller than this January.  In the table below, we have highlighted each of those Januarys along with how the S&P 500 traded for the remainder of the year.  As far as the month of February is concerned, quiet Januarys haven’t had any notable impact on market returns in February as the S&P 500 has been up three out of five times for a median gain of 0.99%.  For the remainder of the year, the S&P 500 has been up a median of 6.31% with positive returns four out of five times, but here again, these results don’t show any meaningful variance from overall historical returns for all other years.

Based on today’s ISM Manufacturing report, manufacturing activity for the month of January jumped to its highest level in over two years.  While economists were expecting the headline reading in the ISM Manufacturing report to come in at a level of 55.0, the actual reading rose to 56.0.  That’s not only the highest monthly print since November 2014, but it also marks the fifth straight month that the index has shown a m/m increase.  The last time we saw that much consistency in growth was in early 2012, when the ISM increased for six straight months.  Going all the way back to 1948, the longest consecutive streak of monthly increases was from mid-1993 to mid-1994 when the headline ISM Manufacturing index increased for 12 straight months.

Not only was the headline index in this month’s report strong, but the internals also showed solid growth.  As shown in the table below, of the index’s ten subcomponents, seven saw m/m increases, while eight out of ten are up y/y.  The biggest increases this month were in Prices Paid (+3.5), Employment (+3.3), and Production (+2.0).  The increase in Prices Paid is especially notable as that index is now at its highest level since May 2011, and over the last year, it has increased by 35.5 points (chart below)!  Strong growth with rising prices?  Not necessarily the news you want to see on an FOMC day.