Friday, July 17, 2009

Daily Wrapup For July 17th

It's the end of another week, and of another day when an intial drop was erased in the late afternoon. Two of the three averages were up, although barely; the only one to close down (barely) was the S&P 500. Earnings season was once again the rationale. After a nice run-up over the last five trading days, Low P/E Bin stock General Electric was pounded to the tune of 6.05% today. It beat its earnings estimate, although barely, but it did not beat its revenue estimate; hence the pile-down. More broadly, some of the financial stocks got thumped around. Bank of America reported disappointing earnings, but Citigroup suprised on the upside. Nevertheless, both were down on the day. The banks in general have had it pretty good in the last little while, so perhaps it was their turn to plummet. On a happier note, this last week broke the four-week losing streak for the major averages.

The cut-off P/E for the lowest quintile did not follow the Dow and NASDAQ by rising today; it dropped slightly, to 10.27. The inferred dividend rate for S&P SPDRs stayed at 2.65%. After taking out ETFs and stocks with market caps of less than 500M, ninety-four stocks were left in the Low P/E Bin. Like the dividend cut-off, the number of stocks in the Bin was unchanged from yesterday. Here are today's changes within, as dash-listed below:

- Hugoton Royalty Trust

- Polaris Industries Inc.

Hugoton got in the Arrivals list because its market cap once again expanded to over 500M. The trust was up 3.02%, even though this gain was chopped in half in after-hours trading. Polaris, yet again, took another round trip in and out of the Bin. Its recent vagries show how unpredictable things can get in the stock market. Yesterday, Polaris was the Bin's big loser, dropping more than 5% after lowering its 3Q guidance. Today, it was the Bin's big winner, simply because it declared an unchanged dividend. Today's 8.24% gain for Polaris left it up over the last two days, more than erasing yesterday's worry-inducing plunge.

Speaking of plunges, many of the financials in the Bin didn't do all that well today. In addition to General Electric, which evidently will stay in the Bin for some time, BB&T Corporation plunged more than 6% today: down 6.22% during regular trading, and a litte more after-hours. More surprising was the 7.05% plummet of yesterday's big winner, CVB Financial Corp. Although it's still up after declaring its Street-beating second-quarter earnings, CVB is up far less than it was. Moreover, CVB's chart action up to that point shows a stock that, supposedly, was in for some bad news. The reversal tales of both CVB and Polaris reinforce the old value-investing perspective: short-term, the market's efficacy as a discount mechanism is questionable...for either direction.

That's all for today's Wrapup. Thanks for reading, and please consider the opinion that stocks get insulted if you say that one of them are just like the other.

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