Crowded trades unwinding as inauguration day nears. Real Time Economic Calendar provided by Investing.com. **NEW** As part of the ongoing process to offer new and up-to-date information regarding seasonal and technical investing, we are adding a section to the daily reports that details the stocks that are entering their period of seasonal strength, based on average historical start dates. Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities. As always, the use of technical and fundamental analysis is encouraged in order to fine tune entry and exit points to average seasonal trends. Stocks Entering Period of Seasonal Strength Today: No stocks identified for today The Markets Stocks ended lower on Tuesday as investors took some chips off the table ahead of the US presidential inauguration on Friday. Areas of the market that had performed well since election day, such as financials and small-caps, took the brunt of the selling pressure, in many cases closing below short-term support presented by their respective 20-day moving averages. The S&P 500 Financial Sector Index shed 2.28%, the largest one-day decline since last June, amidst the Brexit fallout. Perhaps it is no surprise that the move comes on the day that Brexit news is topping headlines again as Britain plans to leave the European Union. The London FTSE, which has been outperforming the benchmarks of most developed nations since the June vote, dropped around 1.5%, trading back to around its 20-day average. The relative strength index (RSI) of the London benchmark is pulling back from the second most overbought reading in the past 23 years, triggering a sell signal in the process; MACD and stochastics may not be far behind. The FTSE is presently hovering around the mid-point of a rising long-term trend channel, which presently spans 6900 to 7650. Seasonally, the FTSE tends to weaken into the last week of January before it finds a firm footing to continue its seasonal run that peaks in May. Financials, US small-caps, and the FTSE weren’t the only trades to unwind on Tuesday. The Japanese Yen, popular carry trade, continues to reverse, adding another 1.7% during Tuesday’s session. Traders have been aggressively borrowing the low yield currency (the Yen) and buying the high yield currency (USD) for years, resulting in positive benefits for the S&P 500 Index. As profiled at the start of January, the Japanese currency, as gauged by the Philadelphia Yen Index, is bouncing from long-term rising trendline support, possibly indicating the conclusion of the multi-year decline in the currency. The negative implications for the carry trade are obvious and a significant tailwind to equity market strength in the US may be exhausted. Gap resistance on the currency benchmark can be found around 93, still another 4% higher than present levels. Seasonally, the yen typically declines through the first quarter, moving opposite to the US Dollar. Along with the surge in the Yen, the US Dollar traded firmly lower, now hovering around previous resistance at 100, according to the US Dollar Index. The strength that is typical for the US currency through the first quarter of the year is clearly missing. The US dollar index is trading firmly below its 50-day moving average for the first time in over three months, which should help to alleviate some of the pressures imposed on those multinational companies that have suffered under the strength of the domestic currency. The consumer staples sector, one such market segment that has been vulnerable to the dollar strength, topped the leaderboard on Tuesday, as a result. The S&P 500 Consumer Staples sector index added 1.35%, bouncing from its 50-day moving average, which had constrained the price of the benchmark since the summer. Seasonally, the consumer staples sector tends to decline through the end of the first month of the year. On the economic front, the New York Fed released its monthly survey of manufacturers in New York State. The general business conditions index remains in positive territory for this first read of the year, showing +6.5. Analysts has expected a print of +8.0. Stripping out the seasonal adjustments, the actual read was +11.8, just shy of the January average of +14.1. Manufacturing conditions in the New York region have been struggling versus its historical average for some time, while other regions, such as Philadelphia, have shown a recent pickup in activity, above the average trend. The Philadelphia Fed Business Outlook Survey is slated to be released on Thursday, perhaps providing a better glimpse of the strength in this segment of the economy. Sentiment on Tuesday, as gauged by the put-call ratio, ended bullish at 0.95. Seasonal charts of companies reporting earnings today: S&P 500 Index TSE Composite