Biotech ETF bouncing from previous horizontal resistance at $300. 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 rebounded on Tuesday, alleviating much of the short-term oversold condition realized in recent days. The S&P 500 Index recorded a gain of 0.99%, bouncing from its rising 100-day moving average and moving back towards broken rising trendline support, now a possible level of resistance, closer to its 50-day average. Momentum indicators remain in bearish territory. As market benchmarks snapped back, cyclical sectors came back into favour, topping the leaderboard on the day as the defensive sectors hugged the flat-line. Among those higher risk areas of the market that charted impressive gains was biotechnology, which fuelled the Biotech ETF (IBB) to a gain of almost 2%. The ETF is bouncing from previous horizontal resistance, now support, at $300, a level that formed the upper limit of an ascending triangle pattern. The upside target of the bullish setup at $360 remains unfulfilled, in part due to a loss in momentum in recent weeks related to chatter on drug prices. Seasonally, the industry tends to gain between June and October, running higher amidst the ramp up in pharmaceutical shipments ahead of the fourth quarter. With gains in shipments in this category trending above average this year, the fundamentals are supportive of the seasonal trade, but the rhetoric surrounding drug prices remain an overhang that may keep momentum under wraps for some time to come. Investors in the industry ETF will want to keep a tight stop at $300 as a break below this limit would present a failed breakout, likely leading an unwind of bullish positions accumulated since mid-June. ^NBI Relative to the S&P 500 On the economic front, a report on retail trade in Canada shows that consumer spending was strong in the first half of the year. The headline print indicated that retail sales increased by 0.1%, missing the consensus analyst estimate of a 0.3% increase. Stripping out the seasonal adjustments, retail trade actually declined by 1.3%, marginally less than the average decline for June of 1.4%. The year-to-date change is showing an increase of 2.0%, well above the average change through this point in the year of –6.3%. This is the first time on record that retail trade has shown an increase in the first six months of the year, versus the value recorded at the end of the previous year. While US retail trade suffers from a below average pace in auto sales, Canada is not seeing the same issue with sales at automobile dealers up by 47.2%, six percent above the seasonal norm for this time of year. Building materials, sporting goods, and accessory stores are also showing above average gains on the year as consumers spend more on their homes and experiences, a trend that is consistent with results south of the border. Retail trade has been the bright spot in the Canadian economy, leading all other segments as the consumer remains willing to spend, however, a slight shift in the back half of the year cannot be discounted. Building materials, which have dominated in the first half of 2017, tend to see sales wane through the back half as consumers take on fewer projects around the home. This is a potential burden on back half of the year results, which are focussed on goods for the end of year holiday period. As alluded to above, consumers have taken a greater interest in experiences, a threat to the growth of goods producing companies in the Christmas season ahead. Canada Retail trade (Sales) Seasonal Chart Looking at the charts of some of the better known retailers in Canada, a mixed profile becomes apparent. A quick run-down of some of the charts follows: Canadian Tire, arguably the best known publicly traded Canadian retailer, broke below rising trendline support this past June, pulling back following the conclusion to its period of seasonal strength at the beginning of May. The stock is now flagging following a surge higher that coincided with the release of the latest earnings report. This short-term bullish setup has the potential to propel price back to previous trendline support, now expected to act as resistance, close to $162. The optimal period to hold the stock, based on the last 20 years of data, is between December 1 and March 1, resulting in an average return above the market benchmark of 2.89%. Another stock in the industry just concluded a period of seasonal strength, ending higher by over 20% in the period. Shares of Dollarama have traded sideways in recent weeks, consolidating the gains accumulated since the start of its period of seasonal strength on March 21st. The seasonally strong period concluded on August 10 and the 50-day moving average has been moving lower since. Long-term trendline support is closer to $110, providing an ideal entry point should it retrace back to that limit. Autocanada sees positive seasonal tendencies in the spring, benefitting from the purchase and maintenance of automobiles following the colder winter months. Between March 24 and June 24, the stock has averaged a return of 29.2% above the market return over the past 10 years, producing an excellent rate of success over the timeframe. The stock has been under pressure for some time, but the negative trend that dominated between mid-2014 and mid-2016 is now broken and a bottoming pattern is being attempted. Double-bottom support can be implied closer to $17, with resistance $10 above that lower limit. A break of resistance would project upside potential towards $37, retracing a sizable share of the declines from the past few years. Intermediate-term declining trendline resistance sits just above present levels. Sentiment on Tuesday, as gauged by the put-call ratio, ended bearish at 1.02. Investors are leaning cautious following Tuesday’s rally, adding insurance to portfolios to protect in the event of another market slide. Surprisingly, the average true range (ATR) of the ratio remains rather muted around the lows of the year, suggesting certainty in portfolio positioning, typically not a characteristic of equity market volatility. Seasonal charts of companies reporting earnings today: S&P 500 Index TSE Composite