Chart of the Day: S&P vs Durable Goods

Durable goods tend to have a very strong correlation with the S&P 500.   It’s far from an exact science, but tracking the directional trend in orders has tended to track the directional trend of the overall market.

This morning’s report showed another solid year over year gain of 0.7%, which was above consensus forecasts. This is on the back of last month’s gain of 1.1%.  Nondefense capital goods orders were also up 2.7%.  All in all, it was a good report. Here’s a bit more via Econoday:

“New orders for durables have been very volatile in recent months and net flat. But maybe there is upward momentum with the latest report. New factory orders for durables in November rose 0.7 percent in November, following a 1.1 percent gain in October. Analysts expected a 0.5 percent gain. The very volatile transportation component was down slightly on aircraft subcomponents. Excluding transportation, orders increased 1.6 percent, following a boost of 1.9 percent in October. Market expectations were for a 0.2 percent rise in orders excluding transportation. For the core measure, gains were widespread.”

Chart via Orcam Investment Research:

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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Comments

  1. Well now we learn that Wall Street and business performance correlate in synchrony. What do we gain from this insight? I am not able to see its predictive value. But isn’t that what so many readers of this blog are looking for? Granted that is not your aim here, but rather to teach finance. Thank you. And you must be aware your readers are really looking for clues to gain more money.

  2. Midas, you’re wrong. if you have a coincident market indicator what you look for are divergences like the one in the end of the 90′s. that’s where you get information.

  3. I’m the same way I do my best to remain neutral. It’s hard if you communicate with the person the other person dislikes then you fall out of favor with them! I simple can’t dislike a person just because someone else does I just can’t.
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  4. If I look at the history of that chart, I’d see no prediction of any kind, except of course we all like to extrapolate upwards. In reality the current trend can end just like the other past two trends did. I’d keep neutral on this.