Wednesday, September 18, 2013

Special Mid-week Update – Wednesday 9/15/13



Two weeks ago in the 9/8/13 Sector Trends blog post noted the following: "In reaction to the employment news on Friday the Bldg-Resident/Comml group (G1520) was the best performing group for the day with a 2.1% gain, the Finance-Property Reit group (G6730) finished #5 with a 1.3% gain, and the Finance-Mortgage Reit group (G6731) finished #8 with a 1.1% pickup. These groups are still 21%, 16%, and 25% off their recent highs and could stage strong rebounds if investors conclude interest rates have stabilized, or if tapering is more modest than currently expected." The Banks-Foreign group which was highlighted in the same blog post (GGAL +15.9%, BSAC +5.9%); and the post also noted "Utility groups... have gotten smoked over the last 5 weeks... (but) the Utility index is now at support, and performance could turn here."

As the reader is no doubt aware, despite foreshadowing to the contrary, the FOMC decided against reducing bond purchases and left the easy money spigot wide open. Without question this qualifies as "more modest than currently expected."

The day's top 20 performing groups (top 10%) included all of the groups listed above as shown in the table below.


Top Performing Industry Groups Wednesday 9-18-2013
Name
Sector
Price % Chg
Rank
Mining-Gold/Silver/Gems
MINING
8.2
1
Bldg-Resident/Comml
BUILDING
4.4
2
Bldg-Wood Prds
BUILDING
3.9
3
Banks-Foreign
BANKS
3.9
4
Energy-Solar
ENERGY
3.5
5
Computer Sftwr-Desktop
SOFTWARE
3.3
6
Finance-Commercial Loans
FINANCE
3.2
7
Finance-Property REIT
REAL EST
3.2
8
Utility-Electric Power
UTILITY
3.0
9
Transport-Air Freight
TRANSPRT
2.8
10
Mining-Metal Ores
MINING
2.8
11
Bldg-Mobile/Mfg & Rv
BUILDING
2.7
12
Utility-Diversified
UTILITY
2.7
13
Finance-Mortgage REIT
REAL EST
2.6
14
Utility-Water Supply
UTILITY
2.4
15
Leisure-Travel Booking
LEISURE
2.3
16
Utility-Gas Distribution
UTILITY
2.3
17
Telecom-Fiber Optics
TELECOM
2.2
18
Chemicals-Paints
BUILDING
2.2
19
Machinery-Mtl Hdlg/Autmn
MACHINE
2.1
20


As the reader knows all of the taper talk and foreshadowing had killed the income trade as investors shifted to growth. That changed today as investors piled back into dividend yielding securities.

This table below compares the daily performance of stocks paying a dividend with those which don't. Stocks paying a dividend returned 50% more than those which don't.

Dividend?
Gain
# of Stocks
Yes
1.49
1259
No
1.04
842

As this table demonstrates, stocks yielding between 3-8% were the sweet spot, doubling the performance of those with no dividend:

Yield
Gain
# of Stocks
3% - 8%
1.98
399
8%+
1.46
96
0.1 - 3%
1.24
764
0
1.04
842
Grand Total
1.31
2101


Here are some charts:

The Philadelphia Utility Index made a massive move higher gaining 3.1% for the day:


Gold jumped off the trend line shown in this past Sunday's blog:


The Philadelphia Housing Sector Index gained 4.3%, weekly chart below:


Top 20 top stocks for the day out of the Housing sector were:

Symbol
Name
Industry Name
Price % Chg
RYL
Ryland Group
Bldg-Resident/Comml
8.7
KBH
K B Home
Bldg-Resident/Comml
8.2
BRP
Brookfield Residntl Ppty
Bldg-Resident/Comml
7.1
DHI
D R Horton Inc
Bldg-Resident/Comml
6.9
MTH
Meritage Homes Corp
Bldg-Resident/Comml
6.8
ICA
Empresas I C A Sa
Bldg-Heavy Construction
6.5
LEN
Lennar Corp Cl A
Bldg-Resident/Comml
6.5
BLDR
Builders Firstsource Inc
Bldg-Constr Prds/Misc
6.4
AWI
Armstrong World Inds
Bldg-Constr Prds/Misc
5.5
PHM
Pulte Group Inc
Bldg-Resident/Comml
5.5
HOV
Hovnanian Enterprises A
Bldg-Resident/Comml
5.3
MDC
M D C Holdings Inc
Bldg-Resident/Comml
5.2
TOL
Toll Brothers Inc
Bldg-Resident/Comml
5.2
MHO
M I Homes Inc
Bldg-Resident/Comml
5.0
MWA
Mueller Water Products
Bldg-Constr Prds/Misc
4.5
BZH
Beazer Homes U S A Inc
Bldg-Resident/Comml
4.4
SPF
Standard Pacific Corp
Bldg-Resident/Comml
4.4
MAS
Masco Corp
Bldg-Constr Prds/Misc
4.1
XIN
Xinyuan Real Estate Ads
Bldg-Resident/Comml
3.9
FBHS
Fortune Brands Hme & Sec
Bldg-Constr Prds/Misc
3.9



To summarize, income stocks and interest rate sensitive groups outperformed today, and are likely to continue to do so over the short term, and perhaps longer.




All data and charts displayed here are the property of MarketSmith, and are published here with their permission. 
 



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