Skip to main content

Leading and lagging indicators - where does Tech go from here?

So how do we view the most recent data from the tech sector? We two economic reports and comments from a CEO. They can be looked at as lagging and leading indicators respectively. How much weight do we give to each?

First, a lagging indicator --

From today's report of the ADVANCE MONTHLY SALES FOR RETAIL TRADE AND FOOD SERVICES, we see that retail electronics sales fell sequentially March to April 2.8%. The table below summarizes the weakness in sequential and year-over-year sales.

Apr 2009 adv. from --Mar 2009 prelim. from --
Kind of BusinessMar 2009 (p)Apr 2008 (r)Feb 2009 (r)Mar 2008 (r)
Electronics & appliance stores-2.8-12.0-7.8-8.8

We know the enterprise technology sector is more or less just limping along. Without the retail consumer buying gadgets and big screen TVs, the tech sector will find it difficult to mount a true recovery.

Now the leading indicator --

Yesterday, Intel's CEO Paul Otellini spoke at a conference at the company's headquarters. Otellini was quoted as saying "What we've seen so far is a little better than what we had expected," in referring to recent sales trends. Furthermore, he said recent economic assessments by research firm Gartner may have been too pessimistic. In March, Gartner predicted that shipments of PCs, the majority of which contain Intel's chips, would probably decline about 12 percent this year from 2008 levels.

Within the tech sector, semiconductor sales are usually looked at as a leading indicator for the rest of tech. If microprocessors are selling, than other PC and server parts should start to see demand. This would include memory chips, networking chips, disk drives, power supplies (that include analog ICs), monitors (typically flat screens these days), etc. Processor sales, in other words, give a bunch of tech sub-sectors a kickstart.

Conclusion --

So where does tech go from here? Sales for last month were disappointing though not as disappointing as they had been. An influential CEO sees things improving now though he warns that it is hard to say whether the improvement has staying power. Tech stocks have now declined for several days in a row with the NASDAQ down a full 3% today.

Today also saw the release of the MANUFACTURING AND TRADE INVENTORIES AND SALES report. The general thrust of the report is that, as of March, inventories had not yet declined to a level that would support strong growth in manufacturing. Yet Intel is now seeing a pickup in sales.

So is the Intel news company specific or can it be generalized across the tech sector? I think it helps some areas of tech but, in the end, investors will have to say "Show me" before accepting Intel's tentative results as a precursor to a tech resurgence.


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 …

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, 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

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 …

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.