January 18, 2008
Interesting chart to look at. Charts like these help us get a higher overview of what is going on.
THE RED FLAG OF CUMMINS IS FLYING
Our high-horsepower economic indicator is getting laid low right now.
Several years ago, we pointed out the soaring share price of Cummins (CMI) as a sign of the healthy global economy. As the world's largest independent maker of diesel engines, Cummins serves a broad spectrum of industry... producing the motive power for over-the-road trucks, bulldozers, cranes, oil pumps, mining shovels, and generators.
As goes the global economy, so goes the share price of Cummins. Problem is, Cummins isn't "going" right now. After soaring hundreds of percent from '03 to '07, the stock has been hammered with a 30% loss in the past few weeks. Chart watchers would call this one a "breakdown."
This big drop isn't reason to dump your portfolio and crawl into a bomb shelter – poor economic times actually create great investment opportunities. But from an economic standpoint, Cummins' chart is one of the biggest red flags in the market right now.
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