Posts Tagged
‘Transports’
by ilene - February 25th, 2010 2:21 pm
Courtesy of Karl Denninger at The Market Ticker
Oops…..
New orders for manufactured durable goods in January increased $5.2 billion or 3.0 percent to $175.7 billion, the U.S. Census Bureau announced today. This was the second consecutive monthly increase and followed a 1.9 percent December increase. Excluding transportation, new orders decreased 0.6 percent. Excluding defense, new orders increased 1.6 percent.
Uh huh.
Ex-transports it’s down.
Internals are not all that good either. Inventory on computers and electronics are being rapidly depleted – manufacturers (despite the BS claims of the media) are NOT replenishing stock. Take the so-called "pumping" and stuff it.
Not-seasonally-adjusted new orders and shipments are down significantly. Since most Christmas "stuff" is ordered and shipped in advance of December, this isn’t very positive at all.
Most important in the "new orders" column is the decrease in computers and electronic components. Remember, we keep hearing how wonderful it has been in earnings reports. Well, if that’s so, then explain the decrease from 31,577 to 23,146 in new orders month/over/month – that is almost a THIRTY PERCENT decrease!
Someone’s been lying.
It’s across the board too – not just computers, but also the subindex for communications equipment. NOT GOOD.
This is a leading indicator for hiring activity folks. I’ve harped on it before and will keep doing so. New employees = more computers and cell phones. If you’re not seeing it there (and you’re not) then the entire premise of "a recovering employment picture" is absolute crap.
Best-a-luck with that "recovery" thesis folks.
Tags: Durable Goods, Economy, inventory, new orders, Recovery, Transports
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by phil - January 25th, 2010 3:00 am
Chart Review by Michael Clark
“By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”
-- John Maynard Keynes
SO, IS THIS FINALLY THE 'REAL' CORRECTION?
What a week it was. The Bears gave the Bulls some payback. Obama got a wake-up call. And the banks got a well-deserved scare (and we hope they will get a well-deserved hair cut).
The markets reacted, as one might expect, with selling. Actually, the selling began before the Massachusetts election and before Obama sent a shot across the Goldman Sach's bow. Last week Intel announced surprisingly strong earnings; and the stock started up and then sank. For the past half-year investor behavior had been the reverse: a buying spree for any stock that did not lose as much as it might have — beating 'Street expectations' that had been dumbed down over and over again during a quarter so that the company could report 'surprising' strength. Suddenly, now, even good earnings are being greeted with selling. Then came Massachusetts — wasn't that a Bee Gees' song?
All the lights went out in Massachusetts
Anyway, readers want to know where the markets stand today, after the sell-off this week. My view of it — my 'view', not my gut-feeling — is that we are, so far, merely correcting from an over-extended rally. This rally has been bizarre, to say the least. This has been a 'fear rally' — usually the 'fear' side of the equation is when selling comes in, 'greed' driving the expansion. But fear of systemic failure has driven this rally; and Ben Bernannke has been the captain sailing the 'Boat of Fear', Ben's logic — that more debt will solve the insolvency crisis — has a shadow side, the logic that a collapse in stock prices will result in systemic failure, international chaos, revolution, repression…made him believe that preservation of the status quo was requiired, at any price. A 'make-believe' recovery could be jump-started, perhaps, if the Fed could just stimulate (and simulate) another asset-bubble. After all – that is how his mentor and predecessor, Alan Greenspan, had become the darling of the coctail party crowd, leading member of Time Magazine's 'Committee to Save the World';…
Tags: CRB, DAX, Dollar, DOW, EPI, FTSE, Gold, HSI, IDX, QID, REW, RSX, Shanghai Composite, SOX, Spain, SRS, SSMI, TBT, Transports, VIX
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by ilene - October 27th, 2009 12:10 pm
Courtesy of The Pragmatic Capitalist
Nothing has been more confounding during this equity rally than the weakness in the underlying fundamentals of the transports. Without fail, the data from the transports has been an excellent leading indicator in past recessions. Warren Buffett has even admitted that the rail data is his single favorite indicator to watch. But as equity market have ripped higher, the rails and other transports have lagged.
Of course, as time has passed we have witnessed the enormous influence of government stimulus on the economy and the incredible impact of money printing on asset prices. As we begin to see signs that government stimulus is failing to generate jobs and a sustainable recovery, the transports continue to forecast a very weak recovery. Have the transports been right this whole time or is the Fed’s liquidity induced rally a more accurate reflection of the economy?
Late last week, Union Pacific CEO Jim Young said the economy had stabilized, but was not recovering just yet:
“So, it looks like the economy has bottomed out, but unfortunately we’re not seeing an upturn yet.
The weekly rails data we report has shown certain signs of stability and even a slight uptick of late, but whether this warrants the extreme recovery optimism we hear about on a daily basis is highly suspect:
Of course, the weakness in the transports isn’t just in the rails. The Air Transports reported a 13% year over year decline in cargo just last week and the latest truck tonnage data shows that the recovery in trucking is also very weak:
In terms of market implications, Richard Russell is now growing very concerned about the action in the Transports:
“From a Dow Theory standpoint, the Transports are now worth watching. They’re sort of sinking out of sight on higher volume. And look at MACD which has now turned bearish. Transports could be a problem. And note today’s plunge of over 100 points.”
From a trading perspective, we saw heavy put action in the Transports late last month as they were beginning to top out. Since then, traders have become very concerned about a potential double top leading to further weakness in the transports sector.
The fundamentals seems to rhyme with the technicals. Some traders couldn’t ask for a better set-up….
Tags: equity rally, fundamentals, Transports
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by ilene - July 2nd, 2009 12:00 am
Courtesy of Ben, the Financial Ninja
FN: I’ve pointed out some of the divergences over the last few weeks that are mentioned in this Bloomberg article.
Banks Falling 23% Since May Foreshadow S&P 500 Slump (Update1): "Declines of more than 20 percent in regional banks and homebuilders and the failure of transportation companies to erase their annual loss may be signs the rally in the Standard & Poor’s 500 Index is about to fizzle.
Smaller lenders in the gauge lost 23 percent since climbing to a four-month peak on May 8, while builders tumbled 26 percent from May 4, when they reached the highest level since October. Concern that mortgage rates, credit losses and foreclosures are increasing spurred retreats in the companies forecast to be among the biggest beneficiaries of $12.8 trillion in government stimulus spending.
Slumps in bank stocks foreshadowed previous declines in the S&P 500 as investors focused on real-estate losses that curbed lending. Regional banks’ 51 percent plunge over 28 days starting Dec. 8 came a month before the S&P 500 began a 28 percent slump to a 12-year low of 676.53. The lenders’ all-time high in February 2007 occurred seven months before the S&P 500’s record.
FN: I pointed out three times that banks had stalled, rolled over and were threatening to break down in: Financials: Charts Say "Decision Time", Update1, Update2.
“If housing and credit led us into all this, they will have to stabilize,” said Mark Demos, a Minneapolis-based money manager at Fifth Third Asset Management, which oversees $18.7 billion. “There’s a growing concern that they’re not out of the woods. Less bad does not equal good.”
Speculation government spending will end the first global recession since World War II helped push up the S&P 500 by 15 percent since March 31, the biggest quarterly increase since 1998. Financial shares gained the most among the S&P 500’s 10 industry groups, rising 35 percent. Futures on the index rose 0.6 percent to 920.60 at 7:12 a.m. in New York today.
Stocks began to decline three weeks ago as economic reports spurred speculation the U.S. economy isn’t recovering fast enough to justify the S&P 500’s 36 percent advance since March 9. The Federal Reserve said in its
…
Tags: dow theory, financials, homebuilders, Stock Market, Transports
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by ilene - June 14th, 2009 5:11 pm
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Courtesy of Corey Rosenbloom of Afraid to Trade
There’s interesting chatter in the “Dow Theory” community as to whether we’re experiencing a non-confirmation in the Industrials and Transports currently – namely, the Industrials are at a new high for 2009 and are above the 200 day SMA while the Transports are not. Let’s take a look at both.
Dow Jones Industrial Index:
One may also ask the question “Is there a ‘Three Push’ Reversal pattern forming in the Dow Jones?” It would appear so, with three consolidating ‘pushes’ or impulses up that have formed on three lower highs in the 3/10 Momentum Oscillator. That alone is a serious non-confirmation of higher prices.
We also see a volume divergence setting in underneath price, with volume in the Dow Jones Index (1.1 Billion today) reaching a level that is clearly below the recent average – more importantly is the “trailing off.”
One can also see the multitude of ‘dojis’ (often known for their ‘reversal’ signal) that have formed over the last two weeks – that is showing signs of serious indecision.
In terms of Dow Theory, the Industrials have made a new high and have risen above their 200 day Simple Moving Average which is classically bullish… but the Transports Index has not.
Dow Jones Transportation Index:
Again, while the Dow recently formed new highs for 2009, the Transports could neither break above their May highs nor its 200 day simple moving average.
A negative momentum divergence has also formed as well as a negative volume divergence.
I could have easily titled this post “Major Sell Signal in the Dow Jones Index” but I dare not be so bold, given the ability of the market to rise against a negative fundamental and technical backdrop.
From a chart (technical) standpoint, the chart is literally screaming “sell signal,” but still we operate in a world of probabilities and stranger things have happened, so do continue to guard your risk and do your own analysis for additional insights.
Corey Rosenbloom, CMT
Afraid to Trade.com
Tags: DOW, dow theory, Transports
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by ilene - June 13th, 2009 2:54 pm
Courtesy of The Pragmatic Capitalist
Interesting read in yesterdays Journal on the Transports. Readers know that I am fond of following the REAL economy – consumer trends and blue collar jobs such as trucking score high on my scale of economic importance. Lately, we’ve been seeing an odd trend. The transport stocks and the general market tend to be trending higher despite little to no signs of strength in actual consumer spending or real economy industries like trucking and rails. The Journal writes:
A new high for transports would “confirm,” in technical lingo, a similar peak for the Dow industrials this week. According to the school of market analysis called Dow Theory, which arises from the ruminations of Wall Street Journal co-founder Charles Dow, having the Dow industrials and the Dow transports in such harmony is strong evidence a bull market is cooking.
But this indicator can send false signals. It was bullish in the spring of 2008, just before the transports and industrials tumbled together.
And reading these charts is a subjective art. Ryan Detrick, technical strategist at Schaeffer’s Investment Research, notes that one could take the view that transports have lagged behind the industrials all year, often a warning sign for stocks. And transports have a good reason for lagging behind: Transportation hasn’t caught up to other recent signs of economic recovery.
One measure of this is the number of railroad cars being loaded with coal, auto parts and other stuff at the nation’s major railroads. Car loadings this year are down nearly 20% from the same period in 2008, putting this on pace to be the worst year since 1982, according to the Association of American Railroads.
The AAR on Thursday reported that loadings jumped last week to their highest levels in nine weeks. But loadings have zigzagged up and down within a downward trend since March, even as transport stocks have risen. Ordinarily, transport stocks and car loadings are more closely correlated, said Ed Yardeni, chief investment strategist at Yardeni Research.
“The plunge in rail-car loadings,” Mr. Yardeni recently told clients, “is one of the most glaring nonconfirmation signals for those of us rooting for an economic recovery and a sustainable bull market.”
The King of Dow Theory sounds equally pessimistic, despite near confirmation in the
…
Tags: consumer trends, dow theory, false signals, Stock Market, Transports
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
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