Friday, August 21, 2009

Daily Wrapup For August 21st

[Note: Corrected number of stocks in the Bin, and added appropriate commentary.]

This time, it was the latest housing figures that supplied the rationale for another big rally. The three major averages opened up with greater than 0.5% gains, and took off like a shot just before 10 AM ET. When the spurt-up was finished, they were up around 1.50%. The rest of the day saw them range-bound until Fed Chairman Bernanke's remarks were disseminated. His suggestion that the recession seems to be over provided an extra boost near the end of the day. Although the averages drifted a little lower near the close, their gains were still strong: the Dow closed up 1.67%, the S&P ended with a gain of 1.86%, and the NASDAQ finished the week up 1.59%. Light sweet crude also gained today, closing at $73.89 per barrel and setting a 10-month record in the process. It's at about where it was in June, but this time without the blithe bullishness that accompanied its last visit to the $75 area. Interestingly, at the same time oil made a year-to-date high, natural gas hit a seven-year low.

The lowest-quintile P/E cut-off also rose today, to 11.89 from yesterday's 11.71. For the first time since this blog started, the S&P dividend yield fell below 2.60%; it ended up at 2.59%. After ETFs and stocks with market caps of under 500M were thrown out, along with ones sporting dividend yields of greater than 10%, the Low P/E Bin was left with one hundred and three stocks for a gain of one from yesterday. Here are the changes in the Bin, as dash-listed below:

- Altria Group, Inc.
- CenterPoint Energy, Inc.
- CVB Financial Corp.
- PartnerRe Ltd.
- WSP Holdings Limited

- Merck & Co., Inc.
- PH Glatfelter Company
- PriceSmart, Inc.
- Snap-on Incorporated

All of the Arrivals are former Bin members returning; all but one got in because their stocks didn't keep pace with the overall market. Altria Group, the American arm of Phillip Morris, saw the P/E cut-off rise above its own. So did electric utility CenterPoint. CVB, a company that I had mistakenly thought would be gone from the Bin permanently, is back once again: the holding company for the Californian Citizens Business Bank got in for the same reason as the two preceding. PartnerRe, an international reinsurer, returned to the Bin becasue the yield cut-off dropped below its own. The last Arrival, WSP Holdings, did keep pace; its stock rose 1.87% today. That gain put its market cap above 500M.

Three of the four Departures got out because 3+% gains in their stocks put their P/Es above the lowest-quintile cut-off. Major pharmaceutical company Merck, warehouse-club discount retailer PriceSmart, and tool maker Snap-On all got out for that happy reason. The sole exception was P.H. Glatfelter, whose stock dropped 2.67% today. There was no news to account for the drop, which put Glatfelter's market cap below the 500M cut-off.

Sometimes rallies engender relief rallies. NTELOS is a stock whose one-month beta is almost certainly negative; as the market rose, it fell. Starting on July 1st, when it had closed at $18.53, NTELOS was declining steadily until five days ago. Until four days ago, it had been stuck in a short-term trading range. Today, however, it shot up 5.79% to close at $14.79. There was no news to explain why this battered-down stock would reverse; the last item of significance was its lowering of its FY 2009 net income estimate about two weeks ago.

That's all for today's Daily Wrapup. Thanks for reading, and remember to check if those dollars at a discount are genuine or adulterated.

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