More signs that the strength in manufacturing is waning. 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: Century Aluminum Co (NASDAQ:CENX) Seasonal Chart Superior Plus Corp. (TSE:SPB) Seasonal Chart CONSOL Energy Inc. (NYSE:CNX) Seasonal Chart The Markets Stocks closed solidly higher on Thursday as House Republicans voted in favour of the widely anticipated tax bill. The S&P 500 Index added eight-tenths of one percent, recouping much of the losses realized in recent days. Four sectors of the market posted gains topping one percent, including consumer staples, health care, materials, and technology, while three sectors sat out of the market move, namely financials, energy, and utilities. The areas of the market that were sold off the most going into this important vote on tax reform bounced the most following the result, including small caps and transports. Even high yield bonds, which had broken down last week, saw a healthy snap-back. The “buy-the-dip” mentality seemingly provides little time to take advantage of market weakness. Over the days ahead, investors will be positioning portfolios to sustain themselves over the Thanksgiving holiday. This could include short-covering, if there is anything left following Thursday’s rally, and re-allocating portfolios prior to the close of the month. This tendency has historically had a positive bias on the equity market in the days surrounding Thanksgiving Thursday. The week itself has seen gains for the S&P 500 Index average 0.72% since 1950 with positive results realized in 69% of periods. The Wednesday prior to the event has seen particularly upbeat results with the large-cap benchmark adding an average of 0.35%, positive 78% of the time. S&P 500 Index Returns around the US Thanksgiving Year Thanksgiving Week Wednesday before Thanksgiving Friday after Thanksgiving 2016 1.44% 0.08% 0.39% 2015 0.05% -0.01% 0.06% 2014 0.20% 0.28% -0.25% 2013 0.06% 0.25% -0.08% 2012 3.62% 0.23% 1.30% 2011 -4.69% -2.21% -0.27% 2010 -0.86% 1.49% -0.75% 2009 0.01% 0.45% -1.72% 2008 12.03% 3.53% 0.96% 2007 -1.24% -1.59% 1.69% 2006 -0.02% 0.23% -0.37% 2005 1.60% 0.35% 0.21% 2004 1.05% 0.41% 0.08% 2003 2.21% 0.43% -0.02% 2002 0.62% 2.80% -0.27% 2001 1.03% -0.49% 1.17% 2000 -1.90% -1.85% 1.47% 1999 -0.38% 0.89% -0.03% 1998 2.47% 0.33% 0.46% 1997 -0.80% 0.09% 0.40% 1996 1.11% -0.13% 0.27% 1995 -0.02% -0.31% 0.26% 1994 -1.99% -0.04% 0.52% 1993 0.10% 0.29% 0.15% 1992 0.82% 0.37% 0.23% 1991 -0.24% -0.37% -0.35% 1990 -0.64% 0.23% -0.29% 1989 0.69% 0.68% 0.60% 1988 0.29% 0.67% -0.66% 1987 -0.69% -0.93% -1.54% 1986 1.37% 0.24% 0.18% 1985 0.32% 0.93% -0.18% 1984 1.72% 0.20% 1.46% 1983 1.27% 0.07% 0.13% 1982 -1.56% 0.71% 0.75% 1981 2.78% 0.44% 0.84% 1980 1.01% 0.60% 0.25% 1979 0.85% 0.19% 0.75% 1978 1.45% 0.49% 0.32% 1977 1.43% 0.42% 0.21% 1976 1.21% 0.44% 0.72% 1975 1.91% 0.25% 0.33% 1974 1.55% 0.68% 0.04% 1973 -4.27% 1.11% -0.32% 1972 1.54% 0.59% 0.32% 1971 0.36% 0.19% 1.78% 1970 2.64% 0.37% 0.99% 1969 -0.54% 0.36% 0.58% 1968 1.95% 0.47% 0.57% 1967 1.16% 0.59% 0.27% 1966 -0.50% 0.68% 0.80% 1965 -0.23% 0.17% 0.10% 1964 -1.30% -0.34% -0.33% 1963 5.20% -0.18% 1.36% 1962 2.29% 0.60% 1.20% 1961 0.31% -0.11% 0.20% 1960 0.56% 0.14% 0.59% 1959 1.28% 0.16% 0.45% 1958 -0.42% 1.72% 1.12% 1957 2.08% 2.89% 1.14% 1956 -1.31% -0.49% 1.05% 1955 0.31% 0.13% -0.09% 1954 3.29% 0.56% 0.96% 1953 0.90% 0.08% 0.57% 1952 1.54% 0.63% 0.55% 1951 -1.84% -0.18% -1.06% 1950 2.32% 1.41% 0.79% Average 0.72% 0.35% 0.34% Gain Frequency 68.66% 77.61% 73.13% On the economic front, a report on industrial production showed the best month-over-month seasonally adjusted change since April. The headline print indicated that industrial production increased by 0.9% last month, firmly ahead of the consensus estimate that called for a 0.5% rise. Strength in manufacturing, which was higher by 1.3%, was a significant influence. Stripping out the seasonal adjustments, industrial production was essentially unchanged in October, mitigating the average tendency for a decline of 0.2% during this first month of the fourth quarter. The year-to-date change remains relatively unchanged at 2.9%, which is short of the average change for this time of year of 4.2%. As for manufacturing, the 1.4% rise in the non-adjusted result certainly exceeds the average increase of 0.3% for the month of October, but the year-to-date trend suggests waning momentum following September’s lacklustre results. Manufacturing is higher by 5.2% through October, which is shy of the 6.4% average gain through this point in the year. October typically marks the peak for the year for manufacturing activity as goods are pumped out for the end of year spending period. While business equipment production is showing an above average trend going into the final months of 2017, it is consumer goods production that is causing concern. Production in this category is higher by a mere 0.3% year-to-date, which is nowhere near the 4.3% average increase by the end of October. Both durable and non-durable goods are lagging their average change on the year, certainly not a statistic that offers an encouraging outlook for the holiday shopping season. Acting as a significant drag on the durable side is motor vehicle production, which is higher by 19.4% through October, the weakest performance since the last recession. The seasonal average gain for this time of year is 27.1%. Consumers are holding on to their vehicles longer, choosing to repair than to replace, causing a significant impact on the auto industry. Longer-tem trends look equally unfavourable as the sharing economy evolves. Bottom line is that there have been increasing hints that the consumer has been reluctant to open their wallets to the degree they had previously, which sets up for a rather muted holiday spending season. Changes to individual taxes could be an enticement to spending should legislation be passed, but, until the writing is on the wall, it would be too speculative to say. The weeks ahead my provide more insight on the holiday season with Black Friday and Cyber Monday sales fast approaching. Industrial Production: Total Seasonal Chart And keeping with US manufacturing activity, results from the Philadelphia business district remain strong, but, as alluded to in yesterday’s report, the strength may be waning. The headline print showed that the general business conditions index fell from 27.9 in October to 22.7 this month, missing the consensus analyst estimate that called for 25.0. Stripping out the seasonal adjustments, the index actually fell from +27.4 to +15.0. The average read for this time of year is –2.1. The index has consistently held above its seasonal average trend ever since the US election, but, with the one-year anniversary since that event upon us, signs of exhaustion in the momentum of the manufacturing economy have emerged. This does not have any immediate negative implications, but it certainly calms the wind that has been at the back of the equity market and the economy throughout the year. Tax reform could act as a catalyst, but, yet again, it would be too speculative to say. North of the border, Canadian manufacturing sales are showing the same decline in momentum that was realized in the US. The headline print for Canadian manufacturing sales was higher by 0.5%, a significant beat versus estimates calling for a decline of the same margin. Stripping out the seasonal adjustments, sales of manufactured goods actually fell by 2.1%, diverging from the 1.3% average gain for September. The result puts the year-to-date gain at 7.7%, which is well short of the 12.9% average increase by the end of September. Unfilled orders, a indication of the backlog within the industry and, hence, a gauge of demand, continues to fall into negative territory year-to-date, now down by 2.6%. And while inventories did pull back by 1.3% in the month, the year-to-date change at 6.6% is almost double the average increase by this point in the year. The risk is that manufacturers are forced to lower prices in order to de-stock, thereby pressuring margins. Diving through some of the details on the sales side, the results are similar to those released in the US: declines in segments relating to the consumer, such as automobile manufacturing, and strength on the business side, which, according to machinery manufacturing, is showing above average growth. Now it is easy to argue that strength in business activity should translate to strength in consumer spending as more people are employed, but with an economy at or near full employment, any improvement from further gains in employment would be marginal. Wage growth is required, which should follow greater labour demand, but this aspect of consumer earnings power remains stubbornly subdued. Obviously, things are evolving, therefore further monitoring remains warranted. Sales of goods manufactured (shipments) Seasonal Chart Sentiment on Thursday, as gauged by the put-call ratio, ended close to neutral at 0.95. Seasonal charts of companies reporting earnings today: S&P 500 Index TSE Composite