the Trade-Radar + TradingStockAlerts blog

The Federal Reserve today reported Industrial Production for May. Production unexpectedly declined 0.2% from the prior month, which was worse than the forecast of a 0.1% increase. Manufacturing output was unchanged in May, the output of utilities shrank 1.8 percent, and the output at mines rose 0.1 percent. Capacity utilization slipped 0.2% to 79.4%. The following set of graphs comes from the Federal Reserve's web site and show the relationship of high tech manufacturing to industrial production overall. Take a look at the middle chart, the one that shows percent change year over year. It's interesting to see that the recession in 2000 (gray highlight) and its accompanying brutal bear market in stocks did not see a dip in industrial production as severe as those seen during the 1970's and 1980's recessions. Looking at the most recent data points in the same chart, it is also interesting to note that without the positive contribution of tech, the percent change in indus...

This post is for those who appreciate a little irony. I have written two recent posts about trouble in the manufacturing sector. The first one discussed the Fed's manufacturing report in mid-March and a couple of regional Fed surveys. The second post discussed the Durable Goods report released toward the end of March. My position at the time was that all these economic reports supplied by the government indicated that industrial stocks were due for a fall. Based on my outlook, I entered a small position in the ProShares UltraShort Industrials ETF (SIJ). My timing was horrible as the entire market immediately made a strong move up and left pretty much all the ultra short funds reeling. Eventually, SIJ hit a stop and the position was closed with a loss. Today, General Electric (GE) reports an unexpected shortfall in earnings and industrial stocks and related ETFs plunged while SIJ jumped up 7.88%. Irony #1: GE's reason for the decline in earnings: primarily problems in the fi...

I recently wrote a post describing what I saw as a weakness in manufacturing. That weakness, I felt, justified taking a position in the ProShares UltraShort Industrials ETF (SIJ). My timing for this trade was astonishingly bad as markets immediately staged a strong rally, driving this ultra short ETF into the ground. What about the premise of the post mentioned above? It seems that today's February Durable Goods report from the U.S. Census Bureau bears out the original analysis. All is not well in the manufacturing sector. My previous post talked about a string of reports showing slowing growth or outright contraction. Sources included the Federal Reserve, the Philadelphia Fed, the New York Fed and the ISM. Today the Census Bureau weighed in and it wasn't pretty. Many headlines indicated the bad number was a surprise. To me, it seems to continue a trend. Here is the summary statement on New Orders from the Census Bureau's web site: "New orders for manufactured durable...

In a post written over the weekend , I described why I thought the financials sector is now close to a bottom. What was implied but not fully elaborated on is the idea that different sectors will bottom at different times. This concept is certainly nothing that most investors don't already know. We always see market leadership rotate from one group of stocks to another. The group may be based on market-cap or it may be based on business sector. The question for investors today is: what sector rotation is taking place at the moment? If the financials have bottomed, does this mean we should go long financials immediately? The conventional wisdom is that it will be a long hard road for the financials to battle back to a point where they would be worth buying. The issue here is patience. Values are compelling now but there may be a long wait to truly reap the rewards. For those with a shorter term horizon, perhaps it would be interesting to look in another direction. Just today we got ...

Graham Corporation (GHM) is a company located almost in my backyard, so to speak, so it was with interest that I reviewed their third quarter earnings announcement this morning. Graham is a small-cap company in the industrial sector. They are an equipment manufacturer for the oil refinery, petrochemical, power generation, fertilizer and pharmaceutical industries, etc. Its products include steam jet ejector vacuum systems; surface condensers for steam turbines; vacuum pumps and compressors and various types of heat exchangers. The numbers -- Sales were up $6 million over the previous year's quarter but down $3 million sequentially. Net income for the third quarter was $3.8 million, or $0.74 earnings per diluted share, compared with $666 thousand, or $0.14 earnings per diluted share, in the prior year's third quarter. On a sequential basis, earnings were down $600 thousand compared to the previous quarter. Domestic sales were 52% of total sales for the third quarter of fiscal 200...