Skip to main content

Industrial Production - tech rolls over, too

The Federal Reserve just released the Industrial Production numbers for October. The headline number, a 1.3% gain, was unexpectedly good due to the resumption of refining and manufacturing activities in the Gulf region after hurricanes Gustav and Hanna. But what about tech?

Below we show a chart of Industrial Production for the sub-category of Computers and Peripheral Equipment. There is a clear drop off in production. In terms of percentage change, the current down-trend is not huge. What is disturbing is that typically the months of September and October show growth as manufacturers of computers and peripherals build inventory for the holiday shopping season. Here we see the opposite effect: rather than growth we have a decline. The numbers for the semiconductor sector look pretty much the same.

Industrial Production - Computers, 11-2008
The next chart comes from the Federal Reserve. It includes Industrial Production and Capacity Utilization for high tech industries.

Industrial Production, Capacity Utilization - Tech, 11-2008There are some interesting features in this chart. For one, technology has held up quite well compared to many other industry sectors. Take a look at the chart below that presents Consumer Durables, Industrial Materials, Business Equipment and a few others. Those sectors look like they are plummeting while Tech looks like it is merely encountering a slowdown.

Tech Industrial Production, Capacity Utilization, 11-2008It is undeniable that Tech is facing a serious slowdown. Witness the downbeat guidance from Cisco. The there was the surprise announcement from Intel that they expected revenue to come in $1 billion below forecasts.

Still technology seems to be in much better shape than some other industries. Comparisons to the 2001-to-2003 tech crash do seem unwarranted. Though production is slowing, tech capacity utilization is far above what was seen after the Internet bubble burst.

As I have suggested in a prior post, large cap tech could be the sector that leads stocks out of this bear market. Tech seems to be down but not dead. As we have rotated out of the leaders of the last bull market - financial and commodity stocks - investors are likely to embrace a completely different sector. Technology's latent strength makes it a good candidate.

Comments

Popular posts from this blog

Unlock Stock Market Profits - Key #1

This is the first in an ongoing series of articles where I discuss what I feel are keys to successful investing. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. (Click here to read the original post)

There are two basic steps to investing. First, you need to find stocks that seem to have some potential. Then you have to determine whether these stocks are actually good investments. There are many stocks that at first glance look interesting, but further research reveals that there are too many negatives to warrant taking a position.

This first post in the series starts at the beginning: getting good investment ideas.

Key #1: If something special is happening to a stock, it will be reflected in some kind of unusual activity in the markets.

As individual investors, we will never be the first to know; however, unusual activity can be an early sign that allows us to follow the Wall Street professionals and …

Unlock Stock Market Profits - Key #4

This is the fourth article in a series of posts describing 10 tools to help you identify and evaluate good investing ideas. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. (Click here to read the original post)

With this fourth post, we will continue another step along the path of finding stocks that seem to have some potential. The first post in the series discussed how to use unusual activity to identify investing ideas. The second post described how to use stock screeners. The third post described how to use lists of new highs and new lows. This post will focus on identifying social or business trends in order to find investing ideas.

Information on new trends might turn up anywhere. In conversation with friends or business associates, in newspapers or magazines, on TV or though your work. The key is to be aware of trends and how they start, stop or change. We'll start by describing what to lo…

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 …