The commodity strength that was expected for 2018 is finally playing out, in a big way. 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: MaxLinear Inc. (NYSE:MXL) Seasonal Chart TransDigm Group Inc. (NYSE:TDG) Seasonal Chart TransForce Inc (TSE:TFII) Seasonal Chart Baxter International Inc. (NYSE:BAX) Seasonal Chart Andrew Peller Ltd. (TSE:ADW-A) Seasonal Chart Northwest Pipe Co. (NASD:NWPX) Seasonal Chart The Markets Stocks posted marginal gains on Wednesday as earnings played tug-of-war on stock prices during the session. The S&P 500 Index added less than a tenth of one percent, continuing to hold above its 50-day moving average; the intermediate moving average is showing slight indications of flat-lining following the down draft that weighed on the average for the past month. Commodities were a significant mover on the day, despite the rise in the US dollar during the session. The price of energy and industrial commodities saw gains in the realm of 2% to 3%, which in turn gave boost to the commodity sensitive TSX Composite. The level of the Canadian benchmark moved above its recent consolidation range, surpassing the neckline of a short-term head-and-shoulders pattern, which had been highlighted in the past week for US indices. The bullish setup projects upside potential towards horizontal resistance just above 15,750. Moving average resistance at the 200-day is directly overhead. The benchmark has been performing on par with US indices over the past three months as the energy and material sectors catch a bid. Topping the leaderboard on Wednesday were once again energy stocks as the price of oil shot up to another multi-year high. This follows another bullish inventory report from the EIA, which indicated that oil stockpiles fell last week by 1.1 million barrels, while gasoline inventories fell by 3.0 million barrels. A substantial jump in the level of of product supplied, a gauge of demand, helping to draw on the stockpiles of both the refined product as well as the raw input. Gasoline product supplied is higher on the year by 14.0%, the second best year-to-date change on record and above seasonal average trend by a whopping 13.6%. The result stripped seven-tenths of a day of supply of gasoline from the market, leaving the supply equation around the seasonal norm at 25 days. Seasonally, the days of supply of gasoline typically falls trough the end of April before rising into the back half of spring as production ramps higher ahead of the summer. As for oil stockpiles, last week’s draw keeps the level of inventories in a tight range, hovering very close to the levels seen at the end of last year. Oil inventories are higher by a mere 0.7% year-to-date. This is a noted divergence from the 6.1% average gain in inventories through the middle of April, certainly offsetting any concerns pertaining to record high production levels in the US. A dip in imports also helped the final tally of oil inventories for this reporting period. Overall, product demand is very strong going into the high demand summer season, certainly supportive of higher prices for the commodity and the stocks, both of which remain in a period of seasonal strength through to May. 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 continues to move above an ascending triangle pattern, the setup alone projects upside potential towards $73. The S&P 500 Energy Sector Index is firmly higher from the test of rising trendline support that was recorded at the start of the month. Horizontal resistance around 575 presents the upper limit to its own ascending triangle pattern, a break above which projects upside potential that would easily surpass the all-time high around 738. The S&P 500 Energy sector index is the only segment of the market that is negative over the past decade, beaten down by the collapse in oil prices between 2014 and 2016. The commodity strength that was expected for 2018 is finally playing out, in a big way. ENERGY Relative to the S&P 500 Aside from energy, cyclical sectors factored prominently in Wednesday’s session as commodity prices jumped. Materials and Industrials topped the market return, while the more defensive consumer staples and utilities closed lower. The performance of the energy, materials, and industrial sectors are often indicative of the strength of the core economy and the outperformance in recent days certainly expresses that investors are confident of economic activity for the year ahead. Economic data has been coming in better than average through the first three months, including in the industrial economy, which relies on the inputs of the three aforementioned sectors. Materials and Industrials, along with energy, remain seasonally strong into the month of May as the stocks benefit from strength in the manufacturing economy during the spring. MATERIALS Relative to the S&P 500 INDUSTRIAL Relative to the S&P 500 Sentiment on Wednesday, as gauged by the put-call ratio, once again ended around neutral at 0.96. Seasonal charts of companies reporting earnings today: S&P 500 Index TSE Composite