Skip to main content

Finally! Tech turns the corner - Durable Goods report for July-09

The Durable Goods report for July was released today. Should tech sector investors be happy?

OK, the answer was revealed in the title of this post. Yes, it's looking like tech has truly established a bottom and has begun to carve out a new trend to the upside.

Shipments --

First, we'll take a look in the rear-view mirror and review the Shipments data. The following chart shows the summary data for the tech hardware sector as a whole. Month-over-month, shipments increased 7.4% and it sure looks like the downtrend has finally been broken.


This next chart focuses just on those hardware manufactures involved in computers and related products. The gain here, 2.7%, is less dramatic but again it looks like a durable bottom has been put in and improvement is underway.


This third chart is focused on Semiconductors. Here we have the star of the tech sector. Semis just put in a 43% increase in shipments month-over-month.


New Orders --

Looking to the future, let's review the New Orders data.

In the following chart, we again look at the tech sector as a whole. New Orders are up a modest 1.6%. For the last few months now, New Orders have been increasing in a slow but sure manner and the resulting up-trend seems ever more secure.


This last chart focuses on computers and this is the only disappointing news we have. New Orders fell 2.8%, confirming that this category in the tech sector is still a little shaky. Nevertheless, the overall look of this chart suggests a bottom has been established here, as well.


Conclusion --

The common factor in all these charts today is that tech sure seems to have established a solid bottom and that a trend reversal is underway with the new trend being clearly to the up-side. Though we didn't show the charts, the Communications Equipment category also participated in the growth seen in July with Shipments increasing 6.8% and New Orders increasing 9,4%. So pretty much across the board, tech turned in some decent numbers.

Another positive factor in today's report is that Semiconductors had a great month in July. All those chips have to go somewhere and I suspect that we will see nice growth reflected in the other tech sector categories as manufacturers build the products that use those semiconductors.

Now if end user demand from businesses and consumers can ramp up sufficiently to absorb what is being manufactured, then we can expect to see these charts continue to head in the right direction.

How to play it --

Given that these charts don't single out any particular company, the way to play the tech recovery could be through ETFs. There is a good selection of ETFs that give investors exposure to the whole sector and others that carve the tech sector into separate categories such as networking, semiconductors, etc. Pick your vehicle and settle in for the ride.

Disclosure: long ROM, USD and IGN

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 …

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…