Financial sector bouncing from support ahead of period of seasonal strength. Real Time Economic Calendar provided by Investing.com. *** 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: Champion Iron (TSE:CIA) Seasonal Chart Xilinx, Inc. (NASDAQ:XLNX) Seasonal Chart Texas Instruments Incorporated (NYSE:TXN) Seasonal Chart Teradyne, Inc. (NYSE:TER) Seasonal Chart KLA-Tencor Corporation (NASDAQ:KLAC) Seasonal Chart Interpublic Group of Companies, Inc. (NYSE:IPG) Seasonal Chart Audiovox Corp. (NASD:VOXX) Seasonal Chart CACI Intl, Inc. (NYSE:CACI) Seasonal Chart The Markets Stocks gyrated around the flat-line on Wednesday as investors continued to monitor action in the bond market. The yield on the 10 and 30-year treasury bond moved higher from support around their respective rising 20-day moving averages, suggesting another attempt at the multi-year highs charted in recent weeks. The push higher in yields injected some much needed strength in the financial sector, which has been underperforming the market since February. The Financial ETF (XLF) is bouncing from support around $26.25, attempting to retrace the losses realized in last week’s market selloff. Seasonally, the financial sector tends to trade higher through the end of the year, although it typically underperforms the market benchmark in the month of November. FINANCIAL Relative to the S&P 500 On schedule for the Wednesday session was the weekly petroleum status report from the Energy Information Administration (EIA). The EIA indicated that oil inventories increased by 6.5 million barrels last week, while gasoline stockpiles declined by 2.0 million barrels. The result increased the days of supply of oil to 25.4, moving further above the average for this time of year of 22. Gasoline days of supply sits at 25.8, two days above the seasonal norm for this time of year. The level of domestic production dipped last week, likely the result of the impact of the recent hurricane that passed through the Gulf. Seasonally, domestic production of oil tends to rise through the fourth quarter. As for gasoline, production of the refined product jumped, however, a commensurate jump in the level of product supplied has yet to be seen. The result implies that producers are working to alleviate rising oil stockpiles, however, this is likely to come at the expense of higher gasoline inventories, the days of supply of which are already at the highest level for this time of year in over two decades. Overall, the market is well supplied, whether looking at oil or gas. Weekly U.S. Days of Supply of Crude Oil excluding SPR (Number of Days) Seasonal Chart Weekly U.S. Days of Supply of Total Gasoline (Number of Days) Seasonal Chart The price of oil fell by over 3% following the report, breaking below its 50-day moving average and moving back to trendline support. Seasonally, the price of oil typically trades lower through to December. On the economic front, it appears that Hurricane Florence may have taken a toll on housing starts in the US. The headline print indicated that starts fell by 5.3% in September to a seasonally adjusted annual rate of 1.201 million. The consensus analyst estimate was for a rate of 1.216 million. Stripping out the seasonal adjustments, starts were actually lower by 5.8%, which is weaker than the 1.2% decline that is average for September. The result puts the year-to-date change below the seasonal average trend by 2.8%, which is still better than the 12.4% below average rate that was seen by this point last year. Hurricanes have quite literally been a headwind in both years, but the storm may bring upon rebuilding activity, as it did following the 2017 storms. Weakness in September’s result was isolated to the South, which saw starts fall by a whopping 17.3% in the month. The north-east actually saw starts rise above the seasonal average trend, while the mid-west and west are more or less inline with the seasonal norm. The weakness also impacted the level of housing units completed, typically a less volatile gauge of homebuilding activity. The year-to-date change dipped marginally below the average trend following a number of months of above average performance. Overall, the negative impact on the report looks to be isolated and a catalyst may be presented in the months ahead. This could help to fuel the seasonal trade in the homebuilding industry, the stocks of which are presently sitting at one of the most oversold levels on record. Industry constituents seasonally gain through to the start of February, just ahead of the peak in the spring home-buying market. For a breakdown of the regions and analysis of permit activity, the charts are available in the database at https://charts.equityclock.com/u-s-housing-starts. North of the border, Statscan released Manufacturing Sales results for the month of August. The headline print indicated that manufacturing sales in Canada fell by 0.4% in the month, beating analyst estimates that called for a 0.7% decline. The year-over-year rate sits at +9.0%, contracting slightly from last month’s rate of +10.5%. Stripping out the seasonal adjustments, manufacturing sales actually increased by 7.5%, which is weaker than the 10.1% gain that is average for the month of August. The year-to-date change of +16.5% is 5.5% above the seasonal average trend, which is the best performance since 2008. Parsing the details on the sales side, both durable and non-durable sales are trending above average as a broad set of categories show strength. These include petroleum, pharmaceuticals, chemicals, wood, iron, machinery, and computer manufacturing. The only real drag on the report is vehicle manufacturing, which is running 8.4% below average on the year. But while manufacturing activity on a broader scale may seem robust as a result of strong demand, the change in inventories suggests otherwise. The year-to-date change in manufacturers’ inventories is higher by 11.2%, which is 7.1% above average for this time of year. Clearly a supply-demand mismatch is apparent within the economy, a situation that could take a toll in future periods as producers are forced to pull back on activity. Sales of goods manufactured (shipments) Seasonal Chart Sentiment on Wednesday, as gauged by the put-call ratio, ended bearish at 1.17. The ratio hit 1.80 earlier in the day as stocks dipped following the opening bell, but this bearish sentiment quickly unravelled, resulting in stocks paring their losses later in the day. Sectors and Industries entering their period of seasonal strength: Seasonal charts of companies reporting earnings today: S&P 500 Index TSE Composite