Sunteți pe pagina 1din 10

July 2, 2010

The ValuEngine Weekly is an Investor Education newsletter focused on the quantitative approach to investing and the tools
available from ValuEngine. In today's fast-moving and globalized financial markets, it is easy to get overloaded with information.
The winners will adopt an objective, scientific, independent and unemotional approach to investing.

ATTENTION Investors and Finance Professionals:

If you are reading this you should sign up for ValuEngine's award-winning stock
valuation and forecast service at the low price of $19.95/month!
If the tables or images in this document do not display properly, please CLICK HERE to download the

Bonus for Readers

--Free Individual Stock Report for Weekly Newsletter
As a bonus to our Free Weekly Newsletter subscribers, we are now offering a FREE
DOWNLOAD of one of our $ 25.00 Detailed Valuation Reports.
This week's free download is our report on BHP Billiton LTD (BHP). ValuEngine has
issued a STRONG BUY recommendation for BHP BILLITON LIMITED. Based on the
information we have gathered and our resulting research, we feel that BHP BILLITON
LIMITED has the probability to OUTPERFORM average market performance for the
next year. The company exhibits ATTRACTIVE company size, market valuation and 5-
year annualized return.
Miner BHP BILLITON LTD is a major player in the global natural resources industry.
The Group has industry-leading positions in aluminum, metallurgical coal, thermal
coal, copper, ferro-alloys, iron ore and titanium minerals and also has substantial
interests in oil, gas, nickel, diamonds and silver.
BHP's share price has been in free fall recently due to tax policy changes in
Australia. Shares started to rally today on news that the Australian government had
relented on imposing the so-called "super profits tax. However, upcoming elections
could impact the on again/off again issue. The opposition party has vowed to
oppose any such tax on giant miners in Australia.
The VE Detailed Valuation Report features advanced academic research that
brings you superior investment strategies in an actionable format. The most
comprehensive and useful report available.
Weekly Subscribers can download a FREE Detailed Valuation Report on BHP HERE.

If you have not subscribed and want to be able to receive a FREE $ 25.00 Detailed
Valuation Report, you can subscribe to our Free Weekly Newsletter HERE.


Index started week Thursday Close 4 day change 4 day change % ytd
DJIA 10143.05 9732.53 -410.52 -4.05% -6.69%
NASDAQ 2227.43 2101.36 -126.07 -5.66% -8.41%
RUSSELL 2000 644.16 604.76 -39.4 -6.12% -3.72%
S&P 500 1077.5 1027.37 -50.13 -4.65% -7.99%

Summary of VE Stock Universe

Stocks Undervalued 77.44%
Stocks Overvalued 22.56%
Stocks Undervalued by 20% 46.70%
Stocks Overvalued by 20% 8.37%

Sector Change MTD YTD Valuation Last 12- P/E Ratio
Basic Industries -1.12% -0.27% 5.73% 14.00% undervalued 32.52% 23.07
Capital Goods -0.90% 0.04% -1.71% 14.62% undervalued 22.12% 18.08
Consumer Durables -0.44% -0.11% -3.92% 18.92% undervalued 36.56% 19.88
Consumer Non-Durables -0.76% -0.40% -3.54% 15.13% undervalued 25.63% 18.25
Consumer Services -0.59% -0.15% -1.22% 18.14% undervalued 26.16% 20.42
Energy -1.14% -0.30% -12.72% 11.88% undervalued 26.46% 20.32
Finance -1.02% 0.02% 2.26% 12.89% undervalued 13.79% 17.95
Health Care -1.42% -0.05% -0.75% 20.60% undervalued 14.49% 18.88
Public Utilities -0.62% 0.03% -7.82% 10.45% undervalued 12.75% 17.01
Technology -1.02% 0.02% -1.36% 21.19% undervalued 29.79% 22.89
Transportation -0.38% 0.00% 0.62% 17.97% undervalued 21.39% 19.22
Index Talk
--The S&P 500

Below, we present various top-five lists for the S&P 500 from our Institutional
software package (VEI).
Top-Five S&P 500 Stocks--Short-Term Forecast Returns

Last 12-M
Ticker Name Mkt Price Valuation(%)
BC 12.7 -51.91 187.98
MTG MGIC INVT CORP WIS 7 96.95 60.55
STR QUESTAR CORPORATION 15.22 -64.41 -51.4
EK EASTMAN KODAK CO 4.37 -75 49.66
EQR EQUITY RESIDENTIAL 41.65 -17.26 93.63

Top-Five S&P 500 Stocks--Long-Term Forecast Returns

Last 12-M
Ticker Name Mkt Price Valuation(%)
MTG MGIC INVT CORP WIS 7 96.95 60.55
EQR EQUITY RESIDENTIAL 41.65 -17.26 93.63
FITB FIFTH THIRD BANCORP 12.16 -18.34 70.31
ETFC E*TRADE FINANCIAL CORP 11.72 78.61 768.15

Top-Five S&P 500 Stocks--Composite Score

Last 12-M
Ticker Name Mkt Price Valuation(%)
AMD 7.39 -68.68 89
MU MICRON TECHNOLOGY INC 8.38 -51.55 61.78
GIS GENERAL MILLS INC 35.45 -50.34 25.44
ESRX EXPRESS SCRIPTS INC 45.84 -49.46 34.7
Top-Five S&P 500 Stocks--Most Overvalued
Valuation(% Last 12-M
Ticker Name Mkt Price
) Retn(%)
CIT C.I.T. GROUP INC-A 33.26 142.6 N/A
MTG MGIC INVT CORP WIS 7 96.95 60.55
ETFC E*TRADE FINANCIAL CORP 11.72 78.61 768.15
TIE TITANIUM METALS 17.47 76.47 90.93

VE Premium Website Stock Analysis subscribers can find complete valuation,

forecast, and ratings data on every individual equity in the S&P 500 HERE.
Not a ValuEngine Premium Website member? Then please consider signing up
for our no obligation, two-week free trial today.
To Sign Up for a FREE TRIAL, Please Click the Logo Below

--New FREE Daily Newsletter Now Available

Richard Suttmeier is ValuEngine's Chief Market Strategist.
With our new FREE ValuEngine Four-in-Four Daily
Newsletter, you'll start your trading day with critical
market information from the Chief Market Strategist
1. Correctly called the bottom of the market
downturn in March, 2009
2. Warned of an impending housing meltdown in
early 2005
3. Predicted the most recent market correction in
April, 2010.
Our Four-in-Four brings you ValuEngine Chief Market Strategist Richard
Suttmeier's latest thoughts and analysis on market trends, key indices, individual
stocks, the regulatory environment, and much, much more.
Richard uses his 35 years of experience as a bond-trader, technical analysis,
and the fundamentally-powered, quant-based systems at ValuEngine to write his
Four-in-Four newsletter every trading day. We are offering it FREE to you now
because Richard's insights have been so helpful to the investment strategies of our
clients in the past.
Here is just some of of the positive feedback we have received about
Suttmeier's analysis recently:
I have really enjoyed reading your morning briefing report and following
some of your trades the past couple months. You and VE do a great job!

Good to get your level-headed evaluations based on many years of

experience, against the charts and the public view of the ones talking their
book. I know who I 'd be paying attention to. Thanks. Glad to see your
articles appearing more frequently just when investors really need to be
ever more aware.
Just wanted to send you a note letting you know that your recent
coverage/analysis of the equity markets, housing, and the banking industry
has been SPOT ON, top notch, and exactly the type of professional
accuracy you are known for. So, just a thank you and a hat-tip to you Rich.

Click HERE or on the logo below to Sign Up for Chief Market Strategist
Richard Suttmeier's FREE Four-in-Four Daily Newsletter!
--Training Tip--Using Forecast Figures for
Model Market Sentiment
If one considers valuation figures, one sees a market that is very
undervalued. But this provides little solace since our universe can remain severely
undervalued for long periods of time. The undervaluation we find now is nowhere
near the peak levels we saw back at the bottom in March, 2009--@90% overall with
78% of stock undervalued by 20% or more vs. 77% overall and 47% undervalued by
20% or more today. Below, we provide the market and sector valuation data from the
bottom, the recent top, and today so that you may compare.

March 5, April 6,
Total Universe Valuation Today
2009 2010
Stocks Undervalued 89.89% 38.71% 77.44%
Stocks Overvalued 10.11% 61.29% 22.56%
Stocks Undervalued by 20% 78.49% 18.50% 46.70%
Stocks Overvalued by 20% 6.05% 31.31% 8.37%

Sector Valuation March 5, 2009 April 6, 2010 Today

Basic Industries 33.16% undervalued 17.63% overvalued 14.00% undervalued

Capital Goods 34.06% undervalued 17.23% overvalued 14.62% undervalued

Consumer Durables 26.63% undervalued 20.52% overvalued 18.92% undervalued

Consumer Non-Durables 36.98% undervalued 8.72% overvalued 15.13% undervalued

Consumer Services 35.32% undervalued 10.64% overvalued 18.14% undervalued

Energy 39.31% undervalued 13.86% overvalued 11.88% undervalued

Finance 31.73% undervalued 11.18% overvalued 12.89% undervalued

Health Care 42.54% undervalued 3.16% overvalued 20.60% undervalued

Public Utilities 32.46% undervalued 5.78% overvalued 10.45% undervalued

Technology 32.25% undervalued 3.64% overvalued 21.19% undervalued

Transportation 38.58% undervalued 14.08% overvalued 17.97% undervalued

We can also use the stock forecast figures as a sign of the system's overall view
of the market. If a large majority of the universe is predicted to decline, we have
another bearish datapoint to add to our analysis. As many power users know, we
have seen numerous stocks rated a buy whose forecast figures are negative. This
reflects the fact that our ratings system runs on a hard bell curve and always ranks the
stocks relative to the rest of the universe. So, stocks that are weak in one factor, such
as forecast, may make up for it in others--such as P/E Ratio, Market Cap, Valuation,
and Momentum.
If we screen the entire database for tickers with a share price greater than
$0.00, we find 6633 stocks. In this basket, we find 1671 equities with positive 1-month
return forecasts. So, roughly 25% of all stocks we cover are predicted to gain in the
next 30 days.
If we look at stocks with full data coverage--by screening for engine-rated
stocks only--we get an initial basket of 4063 tickers. In that basket, 1157 stocks--
@28%-- are predicted to provide positive one-month returns.
If we screen for 4-Engine or higher buy-rated stocks, we find 690 tickers. If we
filter the screen for tickers with positive short-term forecast figures, we get 305
tickers. Thus, only @44% of the buy-rated stocks have positive short-term forecasts--but
they still make the buy list on the bell curve system because they rank high in other
areas such as momentum, market cap, P/E Ratio, and valuation. Always remember
that each stock is ranked relative to the others.
When you consider the overall macro environment, the fundamentally-based
quant analysis of our models, and the deteriorating technicals of the various major
indices as detailed by our Chief Market Strategist, one sees the need to assume a
more defensive posture. Stop losses are key, moving into some cash, and hedging
via some short ETF products-- as Suttmeier recommends to his ValuTrader clients, or
via a short-side portfolio-- as found in our Forecast 22 MNS Newsletter, would be most
prudent at this time.

We continue to recommend keeping a close eye on the overall market trend

as tracked in our universe and sector valuations as well as the individual equity
valuation and forecast data--all of which is available for members on our website.

Not a ValuEngine Premium Website member? Then please consider signing up

for our no obligation, two-week free trial today.
To Sign Up for a FREE TRIAL, Please Click the Logo Below

Suttmeier Says
--Commentary and Analysis from Chief
Market Strategist Richard Suttmeier

If you have any comments or questions, send them to

Treasury Yields
Was it quarter ending window undressing that took the yield
on the 10-Year to 2.879 on Thursday, or was it simply Wall Street
throwing in the towel on short positions. Investors were told by Wall
Street analysts to avoid US Treasuries for the past six months.
Investors who listened to my Risk Aversion trade bought at the 10-
Year note at 4% on April 5th and sold this week between 2.999
and 2.813. New semiannual and quarterly supports are 3.479 and 3.486 with my
annual pivot at 2.999, and weekly, annual, quarterly and semiannual resistances at
2.843, 2.813, 2.495 and 2.249. Yields should stop their decline between 2.999 and

Commodities and Forex

Comex Gold--Being long gold was another popular strategy, but I warned that
the high of $1266.5 in June was a failed test of monthly resistance. Quarterly support is
$1140.9 with my semiannual pivot at $1218.7, and semiannual, weekly and monthly
resistances at $1260.8, $1275.9 and $1279.3. Gold closed below its 21-day and 50-day
simple moving averages at $1235.0 and $1212.1 on Thursday.
Nymex Crude--Being long Crude Oil with supply disruptions in the Gulf of
Mexico and the beginning of Hurricane Season was the favored trade. I said no to
that trade as crude oil remains under the influence of my annual pivot at $77.05,
which was a magnet numerous times in the first half of 2010. Weekly and quarterly
supports are $63.22 and $56.63 with my annual pivot at $77.05, and monthly and
semiannual resistances at $79.36 and $83.94.

The Euro--The most crowded trade was being short the euro and I started to see
limited downside for the euro about a week ago. Quarterly support is 1.1424 with a
monthly pivot at 1.2035 and monthly resistance at 1.2670.

Major Indices

The Dow--Daily and weekly supports are 9,588 and 9,483 with the 21-day, 50-
day and 200-day simple moving averages at 10,141, 10,419 and 10,361, and my
annual pivot at 10,379. Technical momentum is declining with new semiannual and
monthly resistances at 10,558 and 10,891 after my annual resistance at 11,235 was
tested at the April 26th high at 11,258, which marked the end of the bear market rally
that began in March 2009. We are in the second leg of the multi-year bear market
that began in October 2007.


Freddie Mac reported that their 30-Year fixed rate mortgage has fallen to
4.58%. That’s a terrific rate, but the 30-Year fixed rate mortgage at the March 31st
yield spread versus the 10-Year US Treasury the mortgage rate would be 4.03%. That
would really be a help for homeowners seeking to refinance. When the Fed stopped
buying mortgage-backed securities on March 31st the spread versus the 10- Year
yield was 115 basis points. Today’s its 55 basis points wider at 170 over.

--The ValuTrader Model Portfolio Newsletter

The ValuTrader Model Portfolio Newsletter is based on ValuEngine Chief Market
Strategist Richard Suttmeier's proprietary market analytics. Suttmeier combines his
technical analysis expertise with ValuEngine's proprietary valuation, forecast, and
ratings data for more than 4000 equities trading on US markets to come up with a 20
stock portfolio tailored to current market conditions. With ValuTrader, subscribers
access Suttmeier's "Buy and Trade" strategy with a portfolio designed to function well
in both up and down markets.
For more on the Suttmeier ValuTrader Newsletter Portfolio, Click the Logo Below