Further signs that the strength in manufacturing activity is leading to above average increases to inventories. 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: Black Diamond Group Ltd. (TSE:BDI) Seasonal Chart Rayonier, Inc. (NYSE:RYN) Seasonal Chart Sonoco Products Company (NYSE:SON) Seasonal Chart EQT Corporation (NYSE:EQT) Seasonal Chart SUPERVALU INC. (NYSE:SVU) Seasonal Chart Brookfield Asset Management Inc. (USA) (NYSE:BAM) Seasonal Chart Bank of America Corporation (NYSE:BAC) Seasonal Chart Air Products & Chemicals, Inc. (NYSE:APD) Seasonal Chart O’Reilly Automotive, Inc. (NASDAQ:ORLY) Seasonal Chart Scripps Networks Interactive Inc. (NASD:SNI) Seasonal Chart Phillips-Van Heusen Corporation (NYSE:PVH) Seasonal Chart L Brands, Inc. (NYSE:LB) Seasonal Chart The Markets Investors put aside concerns pertaining to the possibility of a government shutdown and bid stocks higher on Friday, pushing benchmarks to a fresh set of all-time highs. The S&P 500 Index broke above a triangle continuation pattern in the last hour of trade as rising trendline support overpowered short-term horizontal resistance. The continuation pattern has further upside implications of approximately 30 points above Friday’s close, assuming extraneous factors (such as a government shutdown) don’t destabilize the momentum. Treasury bond prices continue to weaken, following seasonal norms for this time of year, providing fuel for stocks as investors rotate from one asset class to another. For the week, the large-cap index is higher by 0.86%, keeping momentum indicators elevated at record levels. The relative strength index (RSI) hovers just under 90; MACD above 80; full stochastics just under 100! These levels are unprecedented and certainly give rise to concerns about whether committing new money is appropriate at this stretched market state. However, momentum indicators have yet to show signs of rolling over. With economic news in the US light on Friday, we turn to data released out of Canada pertaining to the state of the manufacturing economy. Statscan reported that manufacturing sales in Canada increased by 3.4% in November, beating the consensus estimate that called for a 2.0% rise. Stripping out the seasonal adjustments, sales of goods manufactured (shipments) actually gained 4.4% in the month, a significant divergence compared to the 2.6% average decline for this second to last month of the calendar year. The result puts the calendar year gain at 13.2%, 1.8% above the seasonal average trend. New orders were little changed in the month, also a positive revelation given the average 2.1% decline for November. But along with the uptick in manufacturing activity has come a rise in inventories, which is showing the largest year-to-date change since 2000. The gauge of the level of products that are essentially being stored is higher by 10.7% through November, more than double the 4.6% average gain. Lack of sell through can often lead to margin compression as companies are forced to lower prices in order to bring inventories back inline. Within the sales side, both durable and non-durable goods showed strength, likely benefitting from the depreciation in the Canadian dollar from the month prior. Food, winery, paper, petroleum, chemical, pharmaceutical, machinery, computer, and motor vehicle manufacturing are all standouts, rising much more than average in this month that is typically characterized as being slower for the manufacturing economy. Strength in the Canadian dollar is likely to be a significant influence on manufacturing activity in Canada in the year ahead. Seasonally, the value of the Canadian dollar relative to its US counterpart tends to hit an important low around this time of year, rising through the spring as the price of oil heads higher. The influence of the energy commodity on the currency has not been as pronounced as it historically has been, but upside pressures are becoming apparent as major moving averages point higher. Sales of goods manufactured (shipments) Seasonal Chart While the manufacturing sector approaches its period of seasonal strength through the spring, the consumer should not be discounted at this time of year. Retail industry stocks enter a period of seasonal strength today, rising through to mid-April. Consumer buying of autos, building materials, and clothing are largely responsible for the strength in retail trade into the spring months, thereby giving lift to the stocks. While the trend in the S&P Retail index is that of higher-highs and higher-lows, the move in the benchmark has been parabolic since the start of September, suggesting near-term vulnerability of a snap decline as levels of support are tested. An equal weight view of the industry, as provided by the S&P retail ETF (XRT), shows that stocks are nearing the all-time high around $49, marking the top of a massive trading range that spans all the way down to $37. A break of the span has a $12 calculated move associated with it. Tax reform has the potential to be a positive influence on this industry that had been showing sluggish results ahead of the holiday season. Sentiment on Friday, as gauged by the put-call ratio, closed bullish at 0.86. Sectors and Industries entering their period of seasonal strength: ENERGY Relative to the S&P 500 Seasonal charts of companies reporting earnings today: S&P 500 Index TSE Composite