Friday, May 6, 2011 will mark the one-year anniversary of the 2010 Flash Crash. The Flash Crash has been blamed on many things and many investors still dispute the true cause or the single smoking gun. This was just one more blow to the credibility of the market place. There is one thing that is about to occur after Friday’s close after the Flash Crash anniversary. The notorious 52-week lows of many key stocks are about to change drastically and look more realistic. We are only highlighting some of the key names, but there were many. Companies like Accenture plc (NYSE: ACN), Apple Inc. (NASDAQ: AAPL), CenterPoint Energy, Inc. (NYSE: CNP), Exelon Corp. (NYSE: EXC), and Procter & Gamble (NYSE: PG) will all be happy to see the date May 6, 2011 disappear into sunset so their 52-week trading ranges look a bit more normalized.
This may sound like something that only the most active or experienced traders should care about. That is only partly true. Retail investors now run stock screens with regularity when they look for value stocks and overvalued stocks alike. When they see that a utility or a consumer products company has doubled or more from its yearly low, they automatically throw these names out. The only reason for that low is because of the Flash Crash and the lows should have never been there in the first place. After Friday, these ranges will look normalized.
Accenture plc (NYSE: ACN) has an official 52-week trading range of $17.74 to $58.21, but the reality is that this is closer to $36 to $58.21. During the Flash Crash panic this one traded some 10 million shares at 3-times normal volume and somehow went all the way down to an official exchange price of $17.74 and then the stock closed back up at $41.09. This was one of the companies which reportedly went to $0.01.
Apple Inc. (NASDAQ: AAPL) is one which will soon stop being mis-quoted for its highs and lows of the last 52-weeks after this Friday. On May 6, 2010, its shares went from a high of $258.25 down to a NASDAQ official low of $199.25 but they closed back up at $246.25 that day. I even know of one trader who made literally $20.00 per share that day and those trades were close enough to the market that the NASDAQ did not break those trades. Apple’s ‘real’ 52-week trading range should really be closer to $235.00 to $364.90.
CenterPoint Energy, Inc. (NYSE: CNP) has an official 52-week range of $5.67 to $18.83, but this really should have been about $12.75 to $58.21 without the Flash Crash. We have this as one of the stocks that went to a penny. This one traded 9.3 million shares, more than twice its average volume and shares closed at $13.88 on that day.
Exelon Corp. (NYSE: EXC) is another one of the companies which reportedly went to $0.01 during the Flash Crash. The 52-week trading range is currently listed as $16.78 to $44.49, and that Flash Crash trading on the NYSE records now shows that shares went from a high of $43.35 down to $16.78 before closing all the way back up at $39.82. Excelon’s ‘real’ 52-week range should be closer to $37.50 to $44.49.
Procter & Gamble (NYSE: PG) has an official 52-week range of $39.37 to $66.95, but the reality is that this is closer to $59.00 to $66.95 with the exception of the Flash Crash. When this crashed that day it was on more than twice normal trading volume of 28 million shares and shares closed at a price then of $60.75 that day. If you recall, Jim Cramer touted this during the peak of selling saying that is an error or a gift, and he was right. Arguably, at the time you could have removed Greece, Ireland, and Portugal off the face of the world and P&G shares might not have ever fallen to that low of a price.
Again, these are just some of the stocks which experienced significant drops. There were many others that took share price hits, but some of those Flash Crash lows were actually taken out for real during the peak of the summer selling last year.
If you want to know what real nitpicking is, that is this view here… Thursday, May 5 should be the one year anniversary of the 2010 Flash Crash. It is due to the one day per year addition on the calendar. While the May 6 date this year is on a Friday, it was on a Thursday last year and it was also a day before key economic data. Regardless of how you look at ‘anniversaries,’ come Monday the 52-week trading ranges will have normalized in these five and many other stocks.
JON C. OGG