Skip to main content

Durable Goods - tech sector still under pressure?

The Advanced Durable Goods report for February 2009 was released today. The headline number was positive and the market took off though gains were moderated by the close.

The headline number for New Orders registered a gain of 3.4% where most analysts expected another decline. Much was made of the improvement but things were not all that great when digging into some individual sectors.

As we always do, we will focus on tech and once again the news is dismal. The following chart shows the Shipments data for the entire tech sector as represented by the Computers and electronic equipment category. January data was revised downward and the February shipments number showed another decline though of only 2%.

Computers - Shipments for Feb-2009
This next chart looks a little deeper into this category at the Semiconductor sub-category. Chip ETFs were screaming higher earlier in the day then someone must have realized the data in the Durable Goods report didn't actually support a rally in chip stocks. January shipments were revised downward and February shipments were down a whopping 21% lower than January's.

Semiconductor - Shipments for Feb-2009
Our third chart shows Unfilled Orders for the whole category of Computers and electronic equipment. Here we have another decline but at least the decline is a modest 0.5%.

Computers - Unfilled Orders for Feb 2009
We've saved the best for last. New Orders is the only measure that showed an increase for the tech sector, rising 5.6%. Effectively offsetting declines in other sub-sectors (Communications equipment and Semiconductors) the Computers and related products sub-sector was up over 10%.

Computers - New Orders for Feb-2009
Conclusion --

Today's enthusiasm resulting from the rise in the headline New Orders number should be tempered with caution. New Orders have a tendency to be canceled or delayed during economic downturns. Note that Unfilled Orders again showed no improvement. Likewise, shipments continue to decline and in the case of Semiconductors broke to a new low.

Seasonally, this is typically a slow time of the year for the tech sector so weakness is not unexpected. It would be nice, however, to see at least a month or two of increased shipments that prove that orders are not being canceled.

Meanwhile, the market is rallying strongly and a rising tide is lifting the tech sector boat regardless of the underlying economic situation. It's hard to advise holding off on tech but the numbers still don't add up.

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 …

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 …

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…