Procter & Gamble (PG), a Dow stock, is a 170 year old manufacturer of some of the most famous brands in the US. Typically the brands are #1 in their businesses and include: Head & Shoulders, Olay, Braun, Gillette, Crest, Oral-B, Dawn, Duracell, Tide, Bounty, Charmin, Pampers, etc. P&G has increased annual dividends for more than 50 years. This quality business has an excellent track record of growth for dividends & stock prices.

However, when markets had started their descent at the start of this decade, P&G plunged from 120 to the 50s, a house of bricks caved in on their business model. Since then they have rebounded and the stock price is above its highs one decade ago (adjusted for a 2-1 stock split). P&G has felt the effects of this recession with a decline in EPS for FY2009 (ending June 30) and another small earnings decline is estimated for next year. EPS should be $4.00 in FY2010 which will easily cover the $1.32 dividend along with a modest increase next year (to keep their track record of annual dividend increases intact).

The Dividend Aristocrats index measures the performance of S&P 500 index members that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years. (Source: S&P)

Since its inception 20 years ago, the dividend aristocrat’s index has outperformed the S&P 500.

But Lynch was never the only great stock-picker, as is evident from other all-stars whose work has inspired us and others to create models based upon their ideas. Numbers aside, when it comes to just-plain lovability, it's always seemed to be a neck-and-neck race between Warren Buffett and Peter Lynch, with affection for the latter springing from the backyard investing with which he's most readily associated.

At the end of each trading week, Hillbent scans the equity market for potential anomalies which exhibit extremely oversold and overbought conditions. Past observations have revealed that such candidates may experience reversal corrections to the upside or downside once the market reconfirms that their fundamentals remain solidly intact or relatively poor. From a contrarian perspective, these lists may also serve as a precursor to changes in institutional sentiment and underlying fundamentals.

(The purpose of this report is not to provide specific recommendations, but instead serve as a time-saving reference tool and starting point for investment ideas as the upcoming trading week unfolds. Of course, the results generated are not always perfect and users are strongly encouraged to perform their own due diligence on these names. Note that overbought and oversold conditions are based upon proprietary algorithms and quantitative models instead of conventional technical analysis indicators. As a supplement to this report, please refer to our ETF Trends Report to determine if market direction trends support a bullish or bearish investment bias over short-term, intermediate, and long-term timeframes.)

Sentiment

The bearish funk continues Wednesday. The S&P 500 is down for a sixth time in seven days, as the economic and earnings news failed to spur any buying interest in the equity market. A number of companies, including SAP (SAP), Conoco Philips (COP), and Etrade (ETFC) slipped on earnings news early in the day.

Meanwhile, energy, metals and mining names are mostly lower after crude oil lost $2.08 to $77.47 a barrel and gold gave up $6 to $1029.40 an ounce.

Masco (MAS) reported strong earnings Monday and raised its guidance, but the bears haven't gone away.

optionMONSTER's Depth Charge tracking system detected the purchase of 5,000 December 10 puts for about $0.25 against no existing open interest. The trade was more than 11 times the size of all options volume yesterday.

Regions Financial Corp. (RF) – Large-volume bearish put plays in the November contract launched the financial services firm onto our ‘most active by options volume’ market scanner. Shares are currently lower by 2% to $4.97. One investor banked gains on a previously established bearish position and subsequently rolled the position to a lower strike price. It appears the trader originally purchased 20,000 puts at the November 6.0 strike for approximately 60 cents per contract on September 16, 2009, when shares were trading at $6.39. The put options have since landed in-the-money, allowing the trader to sell the contracts today at an average premium of 1.04 each. Net profits on the sale amount to approximately 44 cents per contract for a total of $880,000. Next, the investor established a new bearish position by purchasing 20,000 puts at the in-the-money November 5.0 strike for 34 cents a-pop. Profits will begin to accumulate if Region’s shares slip beneath the breakeven price of $4.66 by expiration. Option implied volatility on the stock steadily increased throughout the trading week, rising 29% since Monday’s opening value of 52%, to the current high of 67%.

Q3 2009 Earnings Call

October 27, 2009; 8:00 am ET

• Goldman defends dark pools, status quo. In a letter to the SEC (.pdf), Goldman Sachs (GS) dispelled five common myths about so-called 'dark pool' anonymous trading exchanges, saying the venues benefit both institutional and retail traders by reducing transaction costs and increasing competition. The rest of the 56-page document - which summarizes a Sept. 24 SEC/Goldman gettogether - sheds light on industry practices of short selling, high-frequency trading, flash trading and naked access, which have come under varying levels of criticism in recent months.
• India begins exit. With inflation pressures building, the Reserve Bank of India took the first step toward withdrawing its record fiscal stimulus by ordering lenders to keep more cash in government bonds. "It may be appropriate to sequence the 'exit' in a calibrated way," governor Duvvuri Subbarao said today after boosting the liquidity ratio to 25% from 24%. BofI kept its benchmark rates unchanged, and maintained its 6% GDP growth forecast. "We will start to see G-20 economies exiting now, starting with the emerging ones and then the advanced countries," economist Mridul Saggar said. India's BSE Sensex was down 2.3% amid a broad Asia pullback. (ETF: INP)
• New IRS group targets ultra-rich. A new IRS unit will target the ultra-wealthy by helping decode partnerships, offshore trusts and other complex techniques used to hide earnings. Speaking to an accountants' trade group Monday, IRS commissioner Doug Shulman said the new Global High Wealth Industry group will begin its first audits next month, honing in on individuals with assets or income in the tens of millions - for whom, he said, you cannot assess compliance "by looking only at their 1040s."
• Gross sees weaker U.S., pressure on Treasurys. Influential bond manager Bill Gross warned Monday that an end to the Fed's debt buyback schemes could add selling pressure to several credit markets, including U.S. Treasurys. Gross also said he believes emerging economies will grow faster than the U.S.: "The emerging world, whether it's in Asia, Australia or other associated countries, will do much better from the standpoint of growth, and that's where money should eventually move to. It moves there because of higher profits and it moves there actually because of higher real interest rates."
• China predicts more growth ahead. China reported a 190% jump in overseas investment (to $20.5B in Q3), and forecast industrial production would rise 16% in Q4 after a 13.9% gain in Q3. Analysts say Beijing may be encouraging Chinese companies to invest abroad to ease upward pressure on the yen. Last week, China reported an 8.9% gain in Q3 GDP, leading to speculation about an imminent exit from its super-loose monetary stance. This morning, Morgan Stanley's Stephen Roach said investors are wrong to bet on China reining things in: "The Chinese really are fixated on one thing and one thing alone which is social stability - they don’t want to take a risk of another negative growth surprise." (ETFs: FXI, PGJ)
• Japan's Fujii criticizes BOJ. Japan's finance minister lashed out at its central bank Tuesday, calling its view of the economy too rosy and narrowly informed. "The BOJ has repeatedly said the economy is getting better, but they are dealing with different people," Hirohisa Fujii said at a meeting. The BOJ has a developed a reputation of allowing its jawboning to push it to act in a contrary way just to demonstrate its independence. (ETF: EWJ)
• UBS hires McCann to rebuild Americas unit. UBS (UBS) named Robert McCann - former chief of Merrill Lynch's brokerage unit - to head its Americas wealth management businesses. UBS has been hurt by a tax dispute with the U.S. government, not to mention bad bets on auction-rate securities, writedowns, and capital outflows. McCann dispelled rumors the unit may be up for sale: "I had to go to court against two of my former employers to be able to work with UBS. I would have not done that if the whole goal was to sell the company." Analysts say the unit remains 'strategically challenged,' and are skeptical a new helmsman can combat the negative implications of UBS's loss of its status as banker to the ultra-secretive.
• Utex leads bidders for GE Security. Sources say United Technologies (UTX) has emerged as the frontrunner for GE's (GE) fire alarm and surveillance systems unit, which it put on the block earlier this year. A deal would bolster United's strategy of locking in revenue streams by offering multi-year service contracts for equipment and systems in commercial buildings. GE is thought to want about $2B for the unit.
• EU approves Pepsi bottlers merger. PepsiCo (PEP) received the European Commission's blessings for its $7.8B deal to buy Pepsi Bottling Group (PBG) Tuesday, despite some overlap in their businesses. "The proposed transaction would not significantly change the market structure. Consequently, the Commission concluded that the transaction would not raise competition concerns," it said.
• Europe lending dries up. Euro zone private-sector loans fell 0.3% from a year ago, the first contraction on record, but economists said a slight rise in month-over-month lending was a sign credit in the area was slowly beginning to flow again. "The year-on-year fall is going to catch everyone's imaginations, but that's a lagging indicator of what's been going on," Fortis's Nick Kounis said. Loans to households rose by €14B from August, the fifth sequential increase.
• Data point to bumpy recovery. Regional reports Monday suggested the economy is approaching levels associated with the end of recession, but isn't exactly surging to new highs. Chicago Fed's national activity index (.pdf) fell to -0.81 from -0.65 in August, with production/income making the only positive contribution. Still, the index's three-month moving average makes quite a strong case for a V-shaped recovery. Dallas Fed said Texas-area factory activity declined, and its production index moved into negative ground after leveling the month before. The Chicago Fed's manufacturing index (.pdf) rose 1% to 82.3, but remains 15.7% lower than a year ago.

Earnings: Tue. Before Open

• ACGO Corp. (AGCO): Q3 EPS of $0.13 beats by $0.09. Revenue of $1.4B (-32.7%) in-line. (PR)
• AK Steel (AKS): Q3 EPS of $0.06 beats by $0.05. Revenue of $1.04B (-51.7%) in-line. Shares +1.1% premarket. (PR)
• Avery Dennison (AVY): Q3 EPS of $0.82 beats by $0.25. Revenue of $1.55B (-10.2%) vs. $1.47B. "While the rate of volume decline in the third quarter improved compared with the first half of the year, this was largely due to a slowdown in inventory reductions. Our end-markets remain soft, and we continue to be cautious about the pace of their recovery." (PR)
• BE Aerospace (BEAV): Q3 EPS of $0.36 beats by $0.04. Revenue of $460M (-21.8%) in-line. Expects a substantial increase in earnings and revenue in 2011. (PR)
• Boyd Gaming (BYD): Q3 EPS of $0.09 misses by $0.01. Revenue of $398M (-6.6%) vs. $411M. "While visitation levels remained fairly constant, spend per visitor continues to be down significantly year-over-year, as consumers are still being cautious with their spending." (PR)
• BP (BP): Q3 earnings of $4.67B (-47%) vs. consensus of $3.25B. Sees 2009 costs down by $4B vs. a previous $3B. Total production +6.9%. Shares +5% premarket. (PR)
• Canadian Pacific Railway (CP): Q3 EPS of $0.85 beats by $0.07. Revenue of $1.09B (-14%) in-line. (PR)
• Celanese (CE): Q3 EPS of $0.58 beats by $0.15. Revenue of $1.3B (-28.5%) in-line. (PR)
• CommScope (CTV): Q3 EPS of $0.61 beats by $0.05. Revenue of $750M (-29.4%) vs. $784M. (PR)
• Convergys (CVG): Q3 EPS of $0.27 beats by $0.04. Revenue of $765M (+13.2%) vs. $653M. (PR)
• Corn Products International (CPO): Q3 EPS of $0.70 beats by $0.07. Revenue of $971M (-10.5%) vs. $983M. (PR)
• EarthLink (ELNK): Q3 EPS of $0.28 beats by $0.03. Revenue of $174M (-24.4%) in-line. Net subscriber losses of 146K, down from 149K in Q2 and 275K a year ago. Shares +3.8% premarket. (PR)
• Del Monte (FDP): Q3 EPS of $0.61 beats by $0.24. Revenue of $766M vs. $819M. (PR)
• FirstEnergy (FE): Q3 EPS of $1.11 beats by $0.06. Revenue of $3.4B (-12.8%) vs. $2.96B. (PR)
• FPL Group (FPL): Q3 EPS of $1.38 misses by $0.03. Revenue of $4.47B vs. $4.96B. Shares -3.1% premarket. (PR)
• Honda (HMC): FQ2 profit of ¥54B (-56%) beats consensus by ¥11B. U.S. vehicle sales -25% to 300K. Sees full-year net income of ¥155B, almost triple its previous forecast, and global sales of 3.4M, up 3.2%. (Bloomberg)
• Hospira (HSP): Q3 EPS of $0.90 beats by $0.21. Revenue of $1.01B (+8.9%) vs. $0.94B. Shares +3.7% premarket. (PR)
• IAC/InterActiveCorp (IACI): Q3 EPS of $0.34 beats by $0.21. Revenue of $337M (-8.9%) in-line. Shares +1.3% premarket. (PR)
• Iconix Brand Group (ICON): Q3 EPS of $0.31 beats by $0.03. Revenue of $59.4M (+7.7%) vs. $53.9M. Shares -1.3% premarket. (PR)
• Johnson Controls (JCI): FQ4 EPS of $0.52 beats by $0.01. Revenue of $7.87B (-15.5%) in-line. (PR)
• L-3 Communications (LLL): Q3 EPS of $2.12 beats by $0.27. Revenue of $3.84B (+4.9%) in-line. (PR)
• Life Technologies (LIFE): Q3 EPS of $0.73 beats by $0.11. Revenue of $805M (+2.7%) vs. $791M. Shares +4.1% premarket. (PR)
• Sonic Automotive (SAH): Q3 EPS of $0.21 misses by $0.03. Revenue of $1.52B (-5.9%) in-line. (PR)
• TD Ameritrade (AMTD): Q3 EPS of $0.26 beats by $0.04. Revenue of $658M (+1.3%) vs. $630M. Avg. client trades +35% to 411K/day. Used 70% of net income to buy back shares at average of $11.94/share. Shares +1.4% premarket. (PR)
• Textron (TXT): Q3 EPS of $0.12 vs. consensus of -$0.03. Revenue of $2.55B (-26.6%) in-line. Sees full-year EPS of $0.33-0.63 vs. consensus of -$0.06. (PR)
• Under Armour (UA): Q3 EPS of $0.52 beats by $0.08. Revenue of $270M (+16.2%) vs. $250M. Shares +1.6% premarket. (PR)
• United States Steel (X): Q3 EPS of -$2.11 beats by $0.76. Revenue of $2.82B (-61.5%) vs. $2.72B. Shipment volumes and operating rates increased significantly from the very low levels of Q2. Remains cautious in its outlook for end-user demand, as customer order rates have decreased from Q3. Shares +4.4% premarket. (PR)
• Valero (VLO): Q3 EPS of -$0.39 misses by $0.06. Revenue of $19.5B (-45.8%) vs. $18.8B. Refining margins continued to suffer from a combination of weak demand for refined products and high inventories. Shares +0.6% premarket. (PR)
• Wynn Resorts (WYNN): Q3 EPS of $0.33 beats by $0.18. Revenue of $773M vs. $743M. Shares +1.9% premarket. (PR)

Earnings: Mon. After Close

• Arris Group (ARRS): Q3 EPS of $0.25 beats by $0.01. Revenue of $276M (-7%) vs. $274M. Shares +0.7% AH. (PR)
• Baidu.com (BIDU): Q3 EPS of $2.16 beats by $0.35. Revenue of $187M (+39%) vs. $188M. Sees Q4 revenue of $174M-180M vs. $203M. Shares -13.1% AH. (PR)
• Cabot Oil & Gas (COG): Q3 EPS of $0.41 beats by $0.05. Revenue of $207M (-15%) vs. $205M. (PR)
• DryShips (DRYS): Q3 adjusted EPS of $0.27 beats by $0.07. Revenue of $228M (-30%) vs. $210M. Shares -0.3% AH. (PR)
• Flextronics International (FLEX): FQ2 EPS of $0.13 beats by $0.04. Revenue of $5.8B (+1%) in-line. Sees Q3 EPS of $0.14-0.16 vs. $0.13. Shares +2.7% AH. (PR)
• Health Management Associates (HMA): Q3 EPS of $0.10 beats by $0.01. Revenue of $1.1B (+6%) in-line. Shares -1.1% AH. (PR)
• Masco (MAS): Q3 EPS of $0.08 misses by $0.01. Revenue of $2.1B (-17%) vs. $2B. Sees full-year adjusted EPS of $0.12-0.22 vs. $0.07. Shares -0.1% AH. (PR)
• Plum Creek Timber (PCL): Q3 EPS of $0.12 beats by $0.04. Revenue of $294M (-29%) vs. $274M. Sees Q4 EPS of $0.12-0.17 vs. $0.12, and full-year EPS of $1.39-1.44 vs. $1.35. Shares +0.6% AH. (PR)
• SL Green Realty (SLG): Q3 EPS of $0.98 in-line. Revenue of $250M (-7%) vs. $224M. (PR)
• Vertex Pharmaceuticals (VRTX): Q3 EPS of -$0.71 beats by $0.10. Revenue of $25M (-21%) vs. $30M. (PR)
• VF Corp. (VFC): Q3 EPS of $1.94 misses by $0.01. Revenue of $2B (-5%) in-line. Shares -7% AH. (PR)

Today's Markets

Asia's markets dropped strongly on Tuesday, but Europe is above breakeven at midday, and futures are flat after a U.S. pullback Monday.

Stock markets are having one of their best years in history. Most averages are up over 50% from their lows in March. As usual, the gains have not been spread around equally. Some of the Dividend Aristocrats have been left behind and represent superior opportunities for value investors.

Dividend Aristocrats are companies in the S&P 500 which have minimum track records of 25 consecutive annual increases for their dividends. However, this elite group has shrunk in the last year. All banks are being removed after dividend cuts. This year, General Electric (GE), Pfizer (PFE) and Masco (MAS) have cut dividends which will take them off the list by next year. But those remaining in the group represent excellent values, many have been left behind in the market surge this year. These were the kind of stocks recommended by top analysts when the markets were at their lows (so much for listening to the "experts" for investment advice) last March. Now many of these companies represent good values.

Wednesday marked six months since the March 9th bottom for the S&P 500. It's only fitting that the index managed to close at a new bull market high Wednesday as well. Below we highlight sector performance over the last six months along with the best performing stocks in the S&P 500 since March 9th. As shown, the Financial sector has been leaps and bounds ahead of the other nine S&P 500 sectors during the current bull market with a gain of 132.68%. Four other sectors have outperformed the S&P 500 (+52.75%) as a whole since March 9th -- Industrials (70.18%), Materials (68.80%), Consumer Discretionary (67.59%), and Technology (63.73%). The five sectors that have underperformed the S&P 500 during the current bull have underperformed by quite a bit. Telecom is up the least with a gain of just 19.4%, while Health Care, Energy, Consumer Staples, and Utilities are all up about 30%.

Wellpoint (WLP), United Health (UNH), Aetna (AET), First Niagara (FNFG), Masco (MAS)

Q2 2009 Earnings Call

July 28, 2009 8:00 am ET

• AOL goes solo. Time Warner (TWX) filed with the SEC to officially turn AOL into a stand-alone, publicly traded company called AOL Inc. According to the filing, Time Warner repurchased Google's (GOOG) 5% stake in AOL for $283M earlier this month, valuing AOL at less than $5.66B vs. the $20B implied valuation the business carried in 2005.
• Speculators drove oil price spike. The Commodity Futures Trading Commission will release a report next month suggesting speculators played a major role in causing oil prices to spike, reversing an earlier finding by the CFTC that attributed oil price swings primarily to supply and demand. One of the CFTC commissioners said the original analysis was based on 'deeply flawed data.' The agency, which is shifting away from its former hands-off approach, is expected to institute rules limiting the investments of large institutions in commodities.
• AIG keeps asset sale proceeds. AIG (AIG) used $2.4B from recent asset sales to improve the capital position of its property-casualty unit rather than using the funds to pay down some of its government debt. AIG's need to use some of the sale proceeds to bolster its own businesses will undoubtedly raise questions about the insurer's ability to repay its government bailout.
• U.S. pledges to rein in deficit. At the beginning of a strategic round of talks with China, Geithner pledged to ensure a 'sustainable' U.S. budget deficit by 2013 as Chinese officials expressed concern over the security of their U.S. financial holdings. There were few signs of tensions over the value of the yuan. Both countries agreed not to prematurely withdraw economic stimulus measures.
• SEC updates short-selling rules. The SEC will no longer require institutional investors to report their short-sale positions on a weekly and confidential basis, part of an effort to curb abuse by making more information about short positions available to the public. The weekly reporting was instituted in October as an emergency measure and will expire August 1. A temporary ban on naked short selling was made permanent.
• Amgen, Glaxo reach drug agreement. Amgen (AMGN) and GlaxoSmithKline (GSK) reached an agreement to jointly market denosumab, an osteoperosis treatment that could see annual sales of $2B within a decade if approved by regulators. Glaxo will pay $120M for near-term milestones to share profits in Europe and to sell the drug in countries where Amgen doesn't have any exposure. Amgen will market the drug in the U.S. and Canada, and retain the rights to sell it for cancer in Europe once it's approved.
• Third time's the charm for Delphi. Delphi looks set to emerge from nearly four years of bankruptcy protection with its third attempt at an exit plan. Delphi's board approved an offer to split the company between former parent General Motors and lenders, replacing an agreement announced two months ago between GM and Platinum Equity. Under the new deal terms, lenders will forgive $3.4B in debt in exchange for most of the supplier's assets, and the lenders will pay cash to keep Delphi operating. GM will pay a little over $3B for four North American factories and Delphi's steering business.
• BoA to shutter branches. Bank of America (BAC) is planning to slash the company's 6,100-branch network by 10%, reversing two decades of coast-to-coast expansion. Bank officials reportedly attribute the closings to changes in customer preferences, citing the shift away from traditional branches in favor of online and mobile banking. A timeline for the closures wasn't specified.
• Reining in derivatives. Lawmakers are considering steps to curb speculation in the $39T credit default swaps [CDS] market, which could include preventing investors from speculating on a borrower's credit quality. Among the options under consideration to curb speculation are a ban on naked CDS and a requirement that derivative dealers and investment advisers managing more than $100M report their short interests in CDS contracts to the appropriate regulator.
• Magna improves bid. Magna International (MGA) reportedly improved its bid for General Motors' Opel unit, offering to inject €350M upfront vs. an earlier offer of €100M. The improved offer comes after the German government criticized all three bidders for the amount of their own capital they were willing to inject into Opel.
• CVC brews up AB InBev bid. According to media reports, private equity group CVC Capital Partners is prepared to pay up to €1.5B ($2.1B) for the Central and Eastern European assets of Anheuser-Busch InBev. AB InBev was accepting bids until yesterday, by which point CVC and TPG Capital were still in the running but KKR had dropped out.
• New homes sales (.pdf). New home sales came in at 384K in June, up 11% from May, vs. consensus of 350K. Sales were down 21.3% vs. the previous year. The median home price of $206,200 was down from May's $221,600. Inventory of 281K homes represents an 8.8 month supply, down from 10.2 months in May.

Earnings: Tuesday Before Open

• AMB Property (AMB): Q2 EPS of $0.37 beats by $0.01. Revenue of $147M (-27%) vs. $144M.
• BE Aerospace (BEAV): Q2 EPS of $0.39 beats by $0.05. Revenue of $475M (-9%) vs. $488M. (PR)
• BP (BP): Q2 EPS of $1.01 beats by $0.09. Revenue of $54.8B (-50%) vs. $64B. Shares -1.2% premarket (6:50 ET). (BP press release (.pdf))
• Celanese (CE): Q2 EPS of $0.53 beats by $0.07. Revenue of $1.2B (-33%) vs. $1.3B. (PR)
• Check Point Software (CHKP): Q2 EPS of $0.48 beats by $0.02. Revenue of $224M (+12%) vs. $220M. (PR)
• Coach (COH): FQ4 EPS of $0.43 in-line. Revenue of $778M (-0.5%) vs. $780M. (PR)
• Coventry Health Care (CVH): Q2 EPS of $0.50 beats by $0.10. Revenue of $3.5B (+19%) in-line. (PR)
• Diamondrock Hospitality Company (DRH): Q2 EPS of $0.24 beats by $0.03. Revenue of $144M (-21%) vs. $145M. (PR)
• EarthLink (ELNK): Q2 EPS of $0.29 beats by $0.03. Revenue of $186M (-24%) in-line. (PR)
• Energizer (ENR): Q2 EPS of $1.12 beats by $0.09. Revenue of $997.5M (-6.5%) vs. $1B. (PR)
• FPL Group (FPL): Q2 EPS of $0.99 beats by $0.01. Revenue of $3.8B (+6%) vs. $3.9B. (PR)
• Interpublic Group of Companies (IPG): Q2 EPS of $0.04 misses by $0.06. Revenue of $1.5B (-20%) vs. $1.6B. (PR)
• Jacobs Engineering Group (JEC): FQ3 EPS of $0.76 beats by $0.01. Revenue of $2.7B (-7%) vs. $2.8B. (PR)
• McGraw-Hill Companies (MHP): Q2 EPS of $0.58 beats by $0.03. Revenue of $1.46B (-12%) vs. $1.54B. (PR)
• National Oilwell Varco (NOV): Q2 EPS of $0.90 beats by $0.03. Revenue of $3B (-9.5%) vs. $3.1B. Shares -2.7% premarket (8:10 ET). (PR)
• Office Depot (ODP): Q2 EPS of -$0.22 misses by $0.10. Revenue of $2.8B (-22%) vs. $2.9B. (PR)
• PACCAR (PCAR): Q2 EPS of $0.07 vs. consensus of $0.04 (may not be comparable). Revenue of $1.6B (-58%) vs. $1.7B. Shares +0.9% premarket (8:30 ET). (PR)
• Patriot Coal Corporation (PCX): Q2 EPS of $0.39 vs. consensus of -$0.47 (may not be comparable). Revenue of $507M (+49.3%) vs. $518M. (PR)
• PepsiAmericas(PAS): Q2 EPS of $0.74 beats by $0.06. Revenue of $1.3B (-6%) in-line. (PR)
• Rockwell Automation (ROK): FQ3 EPS of $0.23 beats by $0.03. Revenue of $1B (-31.5%) in-line. (PR)
• Smith International (SII): Q2 EPS of $0.15 misses by $0.06. Revenue of $1.9B (-22%) vs. $2B. (PR)
• SUPERVALU (SVU): Q2 EPS of $0.55 beats by $0.02. Revenue of $12.7B (-5%) vs. $12.8B. (PR)
• Teva Pharmaceutical Industries (TEVA): Q2 EPS of $0.83 beats by $0.03. Revenue of $3.4B (+20%) vs. $3.5B. (PR)
• Textron (TXT): Q2 EPS of $0.08 beats by $0.11. Revenue of $2.6B (-29%) in-line. Lowers guidance for FY '09, sees EPS of $0.33-0.63 vs. prior $0.45-0.75, sees FY '09 revenue of ~$10.6B vs. prior $11B. (PR)
• United States Steel Corporation (X): Q2 EPS of -$3.28 beats by $0.17. Revenue of $2.1B (-68.5%) vs. $2.4B. Shares -3.7% premarket (8:30 ET). (PR)
• Valero Energy (VLO): Q2 EPS of -$0.48 beats by $0.02. Revenue of $17.9B vs. $16.3B. Shares -2% premarket (8:15 ET). (PR)
• Viacom (VIA.B): Q2 EPS of $0.49 beats by $0.01. Revenue of $3.3B (-14.5%) vs. $3.5B. (PR)
• Vishay Intertechnology (VSH): Q2 EPS of -$0.10 misses by $0.02. Revenue of $460M (-41%) vs. $459M. Issues upside guidance for Q3, sees revenue of $480-520M vs. $477M consensus. (PR)
• Waddell & Reed Financial (WDR): Q2 EPS of $0.28 beats by $0.03. Revenue of $200M (-21%) vs. $195M. (PR)
• Waters (WAT): Q2 EPS of $0.78 misses by $0.01. Revenue of $363M (-9%) vs. $366M. (PR)

Earnings: Monday After Close

• ACE Limited (ACE): Q2 EPS of $2.09 beats by $0.15. Net premiums written of $3.4B (-5%). (PR)
• Amgen (AMGN): Q2 EPS of $1.29 beats by $0.13. Revenue of $3.7B (-1%) vs. $3.6B. Raises full-year EPS guidance to $4.80-4.95 vs. $4.57. (PR)
• CF Industries (CF): Q2 EPS of $4.33 beats by $1.72. Revenue of $991M (-15%) vs. $764M. (PR)
• Crane Company (CR): Q2 EPS of $0.47 misses by $0.02. Revenue of $545M (-21%) vs. $588M. (PR)
• Desarrolladora Homex (HXM): Q2 EPS of $0.91 beats by $0.24. Revenue of $359M (+8%) vs. $329M. (PR)
• Fidelity National Financial (FNF): Q2 EPS of $0.40 beats by $0.01. Revenue of $1.6B (+34%) in-line. (PR)
• Health Management Associates (HMA): Q2 EPS of $0.13 beats by $0.03. Revenue of $1.2B (+5%) vs. $1.1B. (PR)
• Hexcel (HXL): Q2 EPS of $0.18 misses by $0.01. Revenue of $277M (-23%) vs. $302M. (PR)

• Kilroy Realty (KRC): Q2 FFO of $0.79 beats by $0.09. Revenue of $71M (+2%) vs. $66M. (PR)

By Chris McKhann

Ahead of its earnings report after the bell today, Masco (MAS) could be developing a near-textbook technical pattern. It is only a potential pattern as that has not yet become active, and it won't unless the quarterly results are good.

Standard & Poor's Dividend Aristocrats are the elite dividend payers in the S&P 500. To be included, each company is required to have a minimum track record of 25 consecutive years of higher dividends. But this group has been shaken after the market meltdown. Seven banks in the group have been or will be dropped from the group after their dividend cuts. The most embarrassing was Bank of America (BAC), a Dow stock, which 2 years ago bragged about its track record of growth (including dividends) especially over the previous 30 years. At the beginning of the credit crisis, thecompany raised the dividend to a $2.56 annual rate. Just a few months later, it must have regretted that decision. Now it only pays a token dividend, and rejoining this group is a minimum of 25 years away. Early this year, 3 prominent members of the group, Pfizer (PFE), General Electric (GE) and Masco (MAS), cut their dividends which will take them off the list by December.

The S&P group has been reduced from about 60, to 51. By my calculations, at least 3 will be removed by year end. The number of new members must be small since these companies already need streaks of 23 or 24 years to be added to the group in the next year or two.

The 2009 list of Dividend Achievers consists of 284 companies. Many of these companies are in the banking, finance and real estate arena. The above timeline excludes most banking, finance and real estate companies and instead focuses on all other sectors of the economy. I routinely avoid falling industries or sectors of the economy that are breaching new highs (highest relative strength).

What should be noticed is that the remaining stocks (after excluding banking, finance and real estate) provided us with 166 companies to invest in with 9 months and 35 different days in the year to (theoretically) buy low and sell at whatever price suits our needs. All of this could be done within a one year time frame allowing the investor to get out when and if necessary. Below I have a table with Dividend Achievers performance from their 52-week low (the left column has the best performing and the right the worst performing).

After 16 weeks, 35% gains and more prayers to assorted deities than you can shake a stick at, the sell-side sentiment fell enough between Friday, June 19 and Friday, June 26 to cause the first “sell” signal since the First Coverage Market Index (i.e., sell-side sentiment) turned bullish at the start of March. And, even though Monday saw sentiment tick up a touch, and there was uncertainty reflected in the sell-side closing out more positions than they opened last week, as they say in the Old West, “The damage, she be done, and we be short!”

Market conditions make shorting the home builders and their cousins - suppliers, Home Depot (HD) et al - very difficult in the short run. In the long run, housing in the US will be permanently different, the ongoing profitability of these companies is in question and several of these outfits are going under. For sure and for certain.

Housing is a wreck and compared to market expectations, getting worse. Why does this matter so much?