Harley Davidson (NYSE: HOG) is a bellwether for the freespending and freewheeling ways of the boomer generation, but the stock's recent action suggests that the times are clearly changing.



Chart Courtesy of StockCharts.com



Reality eventually sets in. A couple of days ago we were talking to a devout Hog rider. In his 50s, this fellow was a drummer for a band that almost made it, and has carried on with his rock n' roll lifestyle for as long as possible. A long time patient of ours, we met him yesterday at the hospital as he was getting ready to undergo a procedure for his chronic low back pain. He tried to sell us his precious Hog.

He said that it hurts too much to ride it anymore, and that he was willing to sell it for $20,000 even though it's been appraised for $36,000. We respectfully declined, but acknowledged that we knew where he was coming from.

And that's part of the problem for Harley. Aside from the tough economy, much of its demographic is running into health issues. Tobacco, partying, and the natural progression of aging doesn't help a weak pocketbook. And a bad back, especially one that's had surgery is not something that really stands up to 500 mile Hog rides down I-35, which means that barring a very sound economic recovery Harley sales could remain sluggish or at least less than what investors got used to, 16 years of profitable quarters until its most recent quarter.

This has been said before, but it bears repeating. It looks as if our encounter earlier this week is not unique, as Harley's problem may be that it's fan base is starting to age beyond the ability to ride. With the average rider at age 47, and a tough economy ahead, trouble is likely to loom for the company.

Late in 2009, Seeking Alpha penned a piece on Harley, which made two important points. One, we've made, the demographic that Harley appeals to, the Baby Boomers, are getting a physical and a financial reality check. The other is that younger riders don't seem to like the big Hogs as much as they like what some call the "crotch rockets" smaller bikes that have a sportier, racier, X-game look and feel.

To be sure, the company has made some changes by buying and developing bikes that appeal to a younger audience. But the stock chart points to nothing too rosy in the future. The stock seems to have bottomed along with the market in the last few days. But the bounce is nowhere near as impressive as even the action in the S & P 500. And although it's above its 200 day moving average, it's below its 20 and 50-day moving average, which are both pointing toward lower prices.

Harley also has problems because guys like this scribe, who always wanted a Hog, never got around to it. And then of course, there's our fellow with the bad back who sadly has to get rid of his since it hurts too much to ride it and it's getting expensive to keep up with. Just another thoughtful reminder of the inevitability of all trends, demographic or otherwise, eventually running their course.

Still, a close look at the chart shows that the stock is fighting to stay above its 200-day moving average, which means that a real bounce could actually materialize. Maybe the old HOG still has a little life left in it.

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