Are Office Supplies, The Paper Kind, An Indicator Of A Recovery?

04/23/09 08:59:43 AM

by Koos van der Merwe

History has shown that when a stock market enters a recovery phase, more paper is used. The reason is simple; invoices, and writing on those invoices, use ink, pens, pencils and other such office supplies, and when that company uses recycled materials, then that is an added bonus So should we start looking for those companies that produce stationery and buy the stock in anticipation of a market recovery?

Security: NWL
Position: Buy

One such company that has given me a buy signal is Newell Rubbermaid (NWL). The company is a global marketer of consumer and commercial products with sales of more than $6 billion and a strong portfolio of brands. On April 22, the company announced the launch of a new line of writing essentials made of recycled materials. These products offer the same reliability and performance as the previous generation.

FIGURE 1: NWL, DAILY. This chart shows buy signals!

Graphic provided by: OmniTrader.

Figure 1 shows a buy signal, given on April 22. Note the previous buy signals of March 11, March 26, April 2, and April 8 and the one solitary sell signal on March 20, the date not highlighted on the chart.

My indicators are the Fisher of the moving average convergence/divergence (MACD) of the high, the stochastic relative strength index (RSI) cycle (3,8), and the Carter cqueeze. The strategies I use to highlight buy and sell indicators are nonoptimized variations that I have tested and am satisfied with. The strategies include stop-losses, volatility, and a primary strategy relative to more than 80 secondary strategies. The strategies shown on the chart are those that I have devised and are available to any and all Omnitrader users on request. The buy/sell signals given assist me in my final decision-making.

It may be wise to look to stationery companies as an indication of the coming market trend. Increased business means greater use of invoices, pens, and anything to do with stationery. A buy for NWL may be an early warning signal of the overall market trend, another sign that the bottom has been reached and that a new bull market is happening.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.