US Equities markets handled multiple faux pas of the new Trump administration as a sideshow and focused on an upcoming proposal to reduce taxes. The S&P 500, Nasdaq 100, and the Dow Industrials (DIA) all soared to all time new highs and closed around +1% on the week.

One thing to note however is that trading volume has dropped to levels not seen since 2007. It could be the sharks are swimming in the dark pools, accumulating positions from murky waters.

Overall, Mr. Market seemed happy with the decision by the federal courts to stop President Trumps executive order on immigration. Mr. Market generally likes the idea of checks and balances. He seemed even more thrilled by Trump’s quick retraction of multiple China’s which eased tensions with the worlds second largest economy.

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Trumps special advisor Kelly Ann Conway, drew flack for confusing promoting Ivana Trump’s clothing line with running the country. Conway was sent to her corner (hard to find in an oval office however) and given a time out. Mr. Market again shrugged his shoulder and moved higher.

The gains this month are confounding skeptics and quants who count on February for being one of the weakest performing months of the year. This month is not over of course and anything can change on a dime.

The overall picture is positive for stocks. Accumulation days have picked up and most risk on indicators positive. Chart patterns are looking good as well with Retail Sector (XRT) finally moving over the 200-day moving average. Market Internals are not overbought and have plenty of room to explore on the upside.

The rotation between what is hot and what not, has been dramatic. The Russell 2000 (IWM) which took off (+13%) after the election lasted until early December has since stalled.
IWM, handed the baton to the tech laden Nasdaq 100 in early January which had barely budged since the election. The QQQ’s then came alive and posted a 5% gain for January and is now up +7.5% YTD. This month is not over of course and anything can change on a dime.

Another good example of this rotation is RSX, the Russian country ETF. It’s now up +18% since the election. Beside Putin potentially sending Snowden back from the USSR (I hear an updated Beatles tune here) to the US, the bromance between Putin and Trump has helped the Russian (RSX) country etf soar.

This rotation between what hot and not across asset classes has been amplified since the election and is likely to persist.