Equity Moves on Sell-Side Sentiment for July 17, 2012
Ratings are back. After a shaky start to July, stocks are back to heeding new analyst ratings for at least a part of the following trading session.
A composite of 25 stocks that were newly rated as bullish or bearish this morning is up 0.89 percent from today's open. Long positions on new Buy, Overweight or Outperform and short positions on new Sell, Underweight or Underperform ratings with entries at opening prices would have had a 60 percent win-to-trade ratio up to this point. The average win (on-the-money position) would have been 2.29 percent, whereas losses would have averaged one percent until the time of writing.
A short play on Caesars Entertainment (NASDAQ: CZR) would have posted the largest pop today: 9.8 percent. Shares were downgraded from Neutral to Underperform by analysts at Bank of America, according to a 5:50 a.m. headline report on Benzinga Professional. The stock opened at $8.98 and reached an intraday low of $8.11 at 1:17 p.m. Benzinga followed up on that initial report with more analyst comments here.
Traders needed not be bearish to make a buck today. The second move, a 7.58 percent pop, would have come out of a long play on ReachLocal (NASDAQ: RLOC). It was another signal coming out of Bank of America - apparently possessing the Midas' touch today - where the stock was upgraded from Underperform to Buy. RLOC shares opened at $10.55 and reached a high of $11.35 by 12:19 p.m. Benzinga Professional reported this at 5:53 a.m. and followed up with more color here.
At varying points in today's session, however, all but one of the 25 stocks were in the money, averaging a 2.03% in-line move with their new ratings this morning. Had these stocks exited at their most opportune moments - intraday highs for long plays on bullish ratings and intrday lows for short plays on bearish ratings - the composite would have returned 1.95 percent.
The other side of that is the most inopportune scenario - exit at intraday lows for long plays and intraday highs for shorts. In that case, the 25-stock composite would have returned a negative 1.4 percent.
As it sits at the time of this writing, the composite is up 0.89 percent. For a single session, that is good. To put in perspective how tough things have been in July, all rating changes month-to-date - including today's - turned positive today for the first time, an aggregate 0.15 percent, assuming a trade-and-hold patter on would-be ratings plays.
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