Could Trump's Speech Sink Stocks Again?

The S&P sank in the days after last year's speech

So far it's been a solid year for U.S. stocks, with the Dow Jones Industrial Average (DJI) and Nasdaq Composite (IXIC) just wrapping up impressive six-week win streaks. While we're now in the thick of earnings seasons, investors tonight will be focusing in on President Donald Trump's second State of the Union speech.

Some traders may use the occasion to speculate on certain stocks, possible infrastructure names or defense contractors. Generally speaking, however, bullish investors will simply be hoping for a better outcome than what we saw after Trump's first State of the Union address last year. Specifically, Schaeffer's Quantitative Analyst Chris Prybal just reminded us that the S&P 500 Index (SPX) struggled mightily in the days following last year's address. with the broad-market index shedding 8.5% in the seven days afterward.

We can obviously say that these are different times and can't just blindly expect this type of weakness again. But just to stoke some fear, we could point out that, according to Bespoke, the percentage of overbought SPX stocks just topped 50% for the first time since last January...

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