Just was thinking about the upcoming election, and what it would mean if Obama endorsed a candidate prior to their being nominated for their party. Is this even allowed?
There is no law against a sitting President endorsing a candidate prior to their nomination. In fact, it is relatively common. The most recent example that doesn't break the 1996 rule for this subreddit is Reagan's endorsement of Bush Sr. in May 1988. In that case though, he waited until many states had already held their primaries and it was clear that Bush would be the eventual nominee. More recently, Clinton endorsed Gore in 1999 (before a single vote had been cast), but that breaks the 1996 rule. Still, should demonstrate that it does happen.
Yet, the nomination process as we understand it today really began only in 1972. Before then, nominees were mainly chosen in the big national conventions, and a sitting President could decide to endorse a candidate prior to or after that convention. Coolidge, for example, waited until Hoover was formally nominated at the Republican Convention in June 1928 to issue his endorsement. On the other hand, Truman endorsed Adlai Stevenson for the Democratic ticket in 1952 prior to the convention.
Endorsements weren't always so easily forthcoming though. In 1968, LBJ did not formally endorse his own VP, Humphrey, until Sept. 17 -- more than two whole weeks after the Democratic convention.
Edit to provide a few sources:
LBJ Breaks Silence - Endorses Humphrey
Reagan Endorses Bush As Successor
Coolidge Endorses Hoover Nomination In Vacation Lodge
The Party Decides: Presidential Nominations Before and After the Reform
Is this even allowed?
Yes but lets elaborate. there is this thing called the hatch act which limits the ability of the executive branch officials to engage in partisan election activities. It gets more technical but that's the gist. wikipedia oddly has a good rundown of this in their list. The executive office of the presidency (including non presidential jobs such as the chief of staff) however isn't covered by the Hatch act making this a moot point for "Obama" or any other president.
this is a neat OLC article from the 70s on the Hatch act
http://www.justice.gov/sites/default/files/olc/opinions/1977/04/31/op-olc-v001-p0054.pdf
edit: also this is a government site devoted to informing people about which positions are limited how by the hatch act and collecting past opinions on it
Not a sitting president, but Theodore Roosevelt campaigned heavily for Charles Hughes in the 1916 election in order to get the US into WW1. Hughes didn't win, and Roosevelt was allowed to raise four divisions of volunteers similar to the Rough Riders, so his campaigning might have overshadowed Hughes himself.
It's mentioned in this Great War documentary around the 21min mark:
https://www.youtube.com/watch?v=Ay22kuic4JA&index=16&list=PLu7g1OfsO2vcKnzSXQiCHisyUIQcclbxr