Skip to main content

Durable Goods Report - is the tech sector slipping?

The Durable Goods report for June was released today. What did it say about the tech sector?

The last couple of months have shown that the decline in tech was moderating and indeed some improvement was in evidence. Did that trend continue?

Shipments --

Many analysts say that new orders are great but shipments are what really count. The following chart shows shipments for the tech sector in general as represented by the Computers and electronic products category.


The results here are alarming. Shipments have reached a three year low. The recent upswing has been undone.

The next chart shows shipments in the semiconductor sector. There was a big surge in April and now two consecutive months when shipments have decreased. The only consolation is that at least we didn't hit a new low.


At last, some good news. Here in the Computers and related products category, shipments actually increased last month. The chart below shows what looks like a serious bottom being made and we are grateful for that.


New Orders --

The following chart shows new orders for the tech sector in general. After hitting a multi-year low, new orders have increased and though we are not at a new low it now seems like the downward trend is resuming.


The next chart shows new orders for the Computers category. Here we had a decrease last month but the situation doesn't really look too bad at all. The decrease was very small and new orders remain around the highest level we have seen in seven months.


Conclusion --

First, the bad news: for the tech sector as a whole, long term trends are still looking weak.

Now the good news: there are green shoots in the Computers category. This is the only area in the charts above where improvement seems to be ongoing.

Interestingly, we have now seen a surge in Semiconductors followed by strength in Computers. So semiconductors did prove to be a leading indicator in this case. With Semiconductor shipments now weakening, let's hope that the seasonal upturn suggested by Intel does actually play out. Otherwise, this is not a good sign at all.

Given that this data is from last month, it is worth referencing the current earnings season. We have seen plenty of tech companies beat expectations; some have even provided positive guidance. Unfortunately, the charts above clearly indicate that the entire tech sector is not completely healthy yet. There are certainly pockets of strength but overall, tech is not yet out of the woods. On the other hand, are there any sectors that are doing appreciably better?

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 profess

Interactive Ads - Google one-ups Yahoo again

Google's ( GOOG ) press release describing the expansion of a beta program for what are being called Gadget Ads has again shown that Google is unparalleled at melding technology and advertising to benefit its bottom line. Gadget Ads are mini-web pages or "widgets" that can be embedded within publisher pages. I have written in the past on Yahoo's ( YHOO ) Smart Ads and how, by more precisely targeting site users and adjusting ad content accordingly, they provide a much desired evolution of the banner or display ad format. Though Smart Ads and Gadget Ads are not really the same, I think it is fair to say that Google has seen the challenge of Smart Ads and has chosen to leapfrog Yahoo by rolling out its own update to the display ad format. The evolution of the Gadget Ad -- One of the trends on the Internet over the last year or so involves software developers creating "widgets" which can be hosted within web pages and blogs. Widgets can be pretty much any

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 wh