Skip to main content

Despite beating expectations, July Durable Goods report has me worried

The Durable Goods advanced report for July was released on Wednesday and the headline number surprised to the upside. This helped the market tack on some further gains beyond Tuesday's big advance.

Besides its effect on a day's action in the stock market, the Durable Goods report is useful for seeing how tech in aggregate is performing. As of this report, the situation is mixed. I always focus on two particular measures: shipments and new orders. In July, the two measures were not consistent and this is worrisome. Let's see how it played out in July.

Shipments --

I generally give less importance to Shipments since this is a backward looking measure reflecting orders that have been confirmed, manufactured and shipped. It's similar to earnings reports -- it's good to know but the data is in the past and we're more interested in the future. The following chart shows how July shipments looked for the overall tech sector:

Results were actually quite good and, to make things even better, the previous two months were revised upward. This indicates that the fears of a "slow patch" in July were overblown.

New Orders --

This is the category that gets the most attention as it provides a glimpse of what might unfold in the future. Looking at the sector summary we see that there was actually a significant drop in new orders.

This is not a good thing. Note how new orders have fallen roughly to levels last seen back in March. Note also that the trend is decidedly not up.

Conclusion --

Shipments in the tech sector have continued to show strength through July. This is good but the question is always whether that kind of performance can continue.

New orders are one of the better indicators we have to forecast future shipments and the level of business activity in an industry or sector. July's dismal result suggests that weakness in tech is indeed impending.

As economists and analysts reduce their estimates of GDP growth, it appears that tech is firmly in the same boat. Optimists will point out that seasonality is due to come into play and  provide support for the tech sector. As the economy in general struggles, though, it becomes harder to believe that tech can escape the downward pull of a slowing economy and cautious consumer.

Besides Apple, which tends to be a special case these days, can other tech companies prosper in this environment? It looks like it's going to be a tough row to hoe for most other companies in the tech sector.

Disclosure: none

Comments

Popular posts from this blog

Running TradeRadar on Windows 7 and Windows 8

Development of the original TradeRadar Stock Inspector software was begun back in the days before Windows 7 and Windows 8 were available.

As these newer versions of Windows have become more popular, we have heard from some users that they are having problems installing and running TradeRadar on their newer PCs.

The good news is that TradeRadar will work just fine on Windows 7 and Windows 8. All you have to do is adjust the Windows Compatibility Settings to ensure TradeRadar runs as intended.

It is recommended that you can apply Compatibility Settings when running the initial installation; however, it is also possible to apply Compatibility Settings after the program has been installed.

Prior to installation
After downloading the install program, go to the folder where you have stored the TradeRadarStkInsp_7_Setup.exe or TradeRadarStkInsp_7_PRO_Setup.exe executable. Right-click on the executable file and select Properties. Click the Compatibility tab. Adjust the Compatibility mode to …

Durable Goods report for Sept just so-so but Computer segment is on fire

The Durable Goods advanced report for September 2011 was released on Wednesday.

I like to dig into the Durable Goods report because it can be useful for seeing how tech in aggregate is performing and how the sector may perform in the future. I always focus on two particular measures: shipments and new orders. Let's see how it played out last month.

Shipments -- 

I generally give less importance to Shipments since this is a backward looking measure reflecting orders that have been confirmed, manufactured and shipped. It's similar to earnings reports -- it's good to know but the data is in the past and we're more interested in the future. The following chart shows how September shipments looked for the overall tech sector:


Results for the overall tech sector were a bit weak but take a look at the next chart which tracks the Computers and related products segment:


Results here were actually quite good and, to make things even better, the previous month was revised upward.

N…

Alert HQ has moved!

End of an era!

This site was started way back in 2006/2007 to showcase my blog posts and the Alert HQ buy signals and sell signals. Alert HQ grew to include other kinds of stock alerts including Swing Signals, Trend Busters, Trend Leaders, Cash Flow Kings and more.

In the meantime, I built a sister site, TradingStockAlerts.com and I started using some of the same Alert HQ content over there. As a result, I am discontinuing the Alert HQ data here at Trade-Radar.com

The good news, however, is that all the Alert HQ signals and stock screens are still completely free. In addition, the pages have been enhanced so that you can hover over a stock symbol and a small chart will pop up so you can get a quick look at the stock's recent price action. If you click on a symbol it will take you to a page with plenty of financial and technical analysis information (still free!) as well as a larger chart that you can play with in terms of adding or deleting indicators, moving averages, etc.

Click …