Treasury and gold prices little changed as stocks rally. 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 posted gains on Wednesday following the release of better than expected data on the economy. The S&P 500 Index closed higher by four-tenths of one percent, albeit on very light volume as traders look to step away from their desks ahead of the long weekend. Month-end window dressing would also be a factor. Recall at the start of this week we noted that the five session span ahead of the Labor Day long weekend is typically positive for stocks. Despite an escalation of tensions with North Korea and one of the most destructive storms to hit the US in history, investors have been undeterred from maintaining this positive month-end bias. The S&P 500 Index continues to push above declining trend channel resistance that was broken during Tuesday’s session. So where do we go from here? As noted in Tuesday’s report, “stocks remain vulnerable until the large-cap benchmark can retake levels above the 50-day moving average in a meaningful way.” While we did get a close above the 50-day and 20-day moving averages, but it is difficult to argue that it did so in a meaningful way. The combination of low volumes, month-end window dressing, negative tendencies for the month of September, evidence of investor complacency (see the put-call ratio below), and the fact that the benchmark remains below previously broken rising trendline support continues to give reason to be cautious, rightly or wrongly. The risk/reward is anything but enticing. Wednesday’s session was undeniably risk-on with cyclical sectors topping the leaderboard, while defensive sectors (staples & utilities) were flat to negative on the day. But as stocks rallied, the ultimate risk-off trades ended little changed. Intermediate treasury bonds, according to the iShares 7-10 year treasury bond ETF (IEF), shed less than a tenth of a percent after gapping higher above resistance on Tuesday. The gap instantly creates a level of support for investors to shoot off of as they debate the geopolitical risks that are ongoing. You may recall from this past spring that we suggested the breakout from the trading range between $102 and $105 projected an upside target towards the open gap charted following the US election in the $108 to $109 zone. The treasury ETF is in that zone now, potentially limiting upside potential beyond present levels, barring some unforeseen shock. Treasury bond prices remain in a period of seasonal strength through September. CME_TY1 Relative to the S&P 500 In addition, gold, which tends to flourish during periods of equity market volatility, ended little changed on Wednesday, continuing to hold above previously broken resistance at $1300. The metal continues to project upside potential towards $1400, remaining supported over the short-term at its rising 20-day moving average. A jump higher in the US Dollar index on Wednesday acted as a headwind during the session, a risk to the short-term path of the precious metal as it progresses into the back half of its period of seasonal strength that peaks in October. The limited movement in treasury bonds and gold suggests risk aversion remains intact, posing risks to stocks through the remainder of the period of volatility through September. FUTURE_GC1 Relative to the S&P 500 But while the broad equity market remains vulnerable, opportunities in various seasonally strong industries continue to excel. Shares of FedEx, a top pick of mine on a recent episode of BNN’S Market Call Tonight, just broke above its 50-day moving average, turning higher from previous resistance around $200. As well, biotech stocks, the past top pick from that same episode, are exploding higher in reaction to recent deal news from Gilead (GILD). Shares of Gilead are higher by over 7%, breaking above long-term trendline resistance. The stock is higher by over 26% since the start of its optimal holding period on June 10th; the optimal sell date is still almost two months away on October 24th. Turning to the weekly petroleum status report in the US, stockpiles of oil continue to fall, this time by 5.392 million barrels. Gasoline, meanwhile, was relatively unchanged as heightened demand pertaining to last week’s travel surrounding the solar eclipse was offset by a ramp up in production (supply). Stockpiles of oil and gasoline are lower on the year by 4.4% and 2.3%, respectively. Next week’s report is expected to see a large draw in gasoline stockpiles as the impact of Hurricane Harvey is picked up in the data. The result could put the days of supply of the refined commodity below the seasonal average for this time of year of 22.8. The impact on oil for the present week is less certain as supply and demand would both see destruction as a result of the storm. Production of oil continued to inch higher last week, hitting a new multi-year high and on track to intersect with the all-time high of 9.6 million barrels per day recorded in 2015. The price of oil ended lower on the day, continuing to diverge from the price of gasoline. 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 Sentiment on Wednesday, as gauged by the put-call ratio, ended bullish at 0.83. The average true range (ATR) is starting to curl higher, suggesting investor uncertainty with respect to portfolio positioning. Seasonal charts of companies reporting earnings today: S&P 500 Index TSE Composite