Skip to main content

Tech - looking for a bottom in the GDP data

The Bureau of Economic Analysis today released the advanced report on GDP for the first quarter on 2009. The headline number came in at -6.1%, significantly worse than expected. The stock market, however, rallied on the news.

Two factors were looked at as positives. Consumer spending was up a surprising 2.2% where another drop had been expected and inventories saw a large decline. With spending up and inventories down, investors are hoping that manufacturing can finally begin to ramp up again.

What about the tech sector?

The GDP data is presented in a set of tables and a few of them break out the numbers by sector. The chart below is taken from one of these tables. Note that the Information processing equipment and software category is the summary line for the whole table.

Extract from Table 2.--Contributions to Percent Change in Real Gross Domestic Product
[Quarters seasonally adjusted at annual rates]


2008:Q12008:Q22008:Q32008:Q42009:Q1
Information processing equipment and software0.270.30-0.16-0.92-0.69
Computers and peripheral equipment
0.100.08-0.16-0.28-0.10
Software0.160.04-0.08-0.23-0.28
Other0.000.180.08-0.42-0.31

Based on the data in this table it does appear that tech just might be out of the woods. Here's why:
  • 2008:Q3 was bad and 2008:Q4 was much worse. Q4 was so bad, in fact, that at this point it does look like the bottom.
  • At the summary level, the 2009:Q1 data does show an improvement.
  • At the sub-sector level, two out three are showing marked improvement, especially Computers and peripheral equipment; ie, hardware looks to be on the mend.
  • The Software sub-sector shows another decline but it's a small decline, much less than that seen in the prior quarter.
It is often said that one data point doesn't make a trend. Today's data, however, is at least a step in the right direction and it certainly fits in with the "less bad" theme that has been driving stocks ever upward over the last couple of months.

Let's hope this positive momentum can continue and that these numbers aren't revised back down when the updated GDP report is released.

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…

Free stock alerts, Trend Leaders, Bollinger Band Breakouts and Cash Flow Kings for Jan 16, 2009

This post is to announce that the latest list of free stock alerts is up and available at Alert HQ. Each week we scan over 7400 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move. Our goal is to identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside.

Wait, there's more...

We also use the Alert HQ process to generate more free lists of stocks and ETFs

The first byproduct of the Alert HQ process is the Trend Leaders list, our collection of stocks in strong up-trends. These stocks are registering strong signals using Aroon analysis, DMI and MACD. They are also above their 50-day exponential moving average. This week's list is now available at the TradeRadar site on the Trend Leaders page.

As another byproduct of the Alert HQ process we have generated a list of stocks that have broken either above their upper…