August 26, 2011

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MARKET OVERVIEW

Index
DJIA NASDAQ RUSSELL 2000 S&P 500

started week
10820.37 2396.88 660.86 1123.55

Thursday Close
11149.82 2419.63 674.42 1159.27

4 day change
329.45 22.75 13.56 35.72

4 day change %
3.04% 0.95% 2.05% 3.18%

ytd
-5.22% -9.78% -14.85% -9.31%

Summary of VE Stock Universe

Stocks Undervalued Stocks Overvalued Stocks Undervalued by 20% Stocks Overvalued by 20% 85.46% 14.54% 56.64% 5.02%

SECTOR OVERVIEW
Sector
Aerospace Auto-Tires-Trucks Basic Materials Business Services Computer and Technology Construction Consumer Discretionary Consumer Staples Finance Industrial Products Medical Multi-Sector Conglomerates Oils-Energy Retail-Wholesale Transportation Utilities

Change
-2.19% -2.35% -1.09% -1.85% -2.29% -1.80% -1.80% -1.84% -1.94% -1.92% -2.13% -1.40% -1.82% -2.19% -1.60% -1.73%

MTD
-12.87% -21.36% -13.25% -14.04% -15.57% -17.18% -14.59% -11.67% -11.78% -14.76% -13.03% -14.11% -18.26% -13.03% -14.84% -6.30%

YTD
1.31% -31.19% -17.90% -11.11% -13.41% -27.69% -14.26% -16.05% -11.34% -15.42% -7.07% -16.44% -19.30% -6.93% -18.29% -4.21%

Valuation
20.72% undervalued 30.07% undervalued 21.53% undervalued 21.29% undervalued 25.58% undervalued 26.47% undervalued 24.89% undervalued 15.09% undervalued 20.45% undervalued 25.61% undervalued 24.81% undervalued 21.52% undervalued 20.87% undervalued 19.97% undervalued 14.39% undervalued 6.44% undervalued

Last 12MReturn
12.36% 13.34% 30.95% 11.50% 13.08% -8.67% 11.30% 7.27% 2.87% 19.22% 6.96% 13.28% 25.57% 19.05% -0.04% 12.03%

P/E Ratio
19.17 14.77 24.28 21.34 36.21 38.91 30.28 17.01 23.04 18.3 27.7 21.42 45.55 22.41 16.47 25.23

Sector TalkFinance
Below, we present the latest data on leading Finance Sector stocks from our Institutional software package (VEI). These results were filtered by market price and volume--no results below 3$/share or less than 100k shares/day volume.

Top-Five Finance Sector Stocks--Short-Term Forecast Returns

Ticker
WAC FAF SFI NCT SFE

Name
WALTER INV MGMT FIRST AMER FINL ISTAR FINL INC NEWCASTLE INV SAFEGUARD SCTFC

Mkt Price
23.88 14.44 6.3 4.8 14.59

Valuation(%)
-69.83 -12.78 -55.61 -69.24 -75

Last 12-M Retn(%)

55.77 3.29 72.6 97.53 23.96

Top-Five Finance Stocks--Long-Term Forecast Returns

Ticker
WAC SFI MIM CNS FAF

Name
WALTER INV MGMT ISTAR FINL INC MI DEVLPMNTS -A COHEN&STRS INC FIRST AMER FINL

Mkt Price
23.88 6.3 26.29 35.21 14.44

Valuation(%)
-69.83 -55.61 N/A -15.46 -12.78

Last 12-M Retn(%)

55.77 72.6 130.61 97.03 3.29

Top-Five Finance Stocks--Composite Score

Ticker
MCO AEA WAC DLLR SLM

Name
MOODYS CORP ADV AMER CASH WALTER INV MGMT DOLLAR FINL CP SLM CORP

Mkt Price
29.26 8.2 23.88 19.1 13.69

Valuation(%)
-43.67 -24.19 -69.83 -24.42 -42.48

Last 12-M Retn(%)

39.93 154.66 55.77 90.24 23.78

Top-Five Finance Stocks--Most Overvalued

Ticker
XL AFSI PKY AEC CLP

Name
XL GROUP PLC AMTRUST FIN SVC PARKWAY PPTY ASSOC ESTATES COLONIAL PPTYS

Mkt Price
18.85 22.46 11.68 16.69 19.79

Valuation(%)
67.29 45.33 41.05 37.27 31.97

Last 12-M Retn(%)

8.02 69.13 -19 27.31 29.18

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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.
Hewlett Packard (HPQ). Hewlett Packard Hewlett Packard is one of the leading global providers of computing and imaging solutions and services for business and home. The company is focused on capitalizing on the opportunities of the Internet and the proliferation of electronic services. Its major businesses include Imaging and Printing Systems, Computing Systems and Information Technology Services

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What's Hot
Yaron Sadan of Osher Capital with a Warning on Financials
ValuEngine is pleased to announce another addition to our stable of high quality investment newsletters. Our latest premium newsletter comes to us from Yaron Sadan and is called "The Hard Trade." Sadan is the founder and president of Osher Capital Advisors, LLC (Osher). Before starting Osher, Sadan worked in the private wealth management group of Goldman Sachs.

Banks will Show us the Way

Bank of America will soon approach its financial crisis low, and Citibank, despite a 10 for 1 split is back on its way to single digits. What are the implications? For starters, lets recognize that banks are still an integral part of the economy, as is debt. Then, lets admit that the assets carried by the banks were never re-priced correctly, even in the depths of the financial crisis in 2008-2009. Finally, lets remove the mental block that large banks will all be saved in the next round of house-cleaning.

Putting that together, we have XLF off about 30% without any sign of stopping soon.

I anticipate that one of the big banks (BAC, WFC, C, or the like) will need to be held up as an example for politicians to prove to voters that they are not propping up their cronies. I have no idea which bank will take the brunt of the pain, but all of them will be sold until we find a new place to stabilize much further down.

Thats not good in case you werent sure. It means lending standards will continue to rise, credit will be limited, lines will be pulled in, and jobs will be cut exactly the opposite of what Obama and Bernanke were hoping for. Banks will continue to drag the economy lower, not because of any mean streak per se, just by the very nature of mispricing of assets, increased regulations, etc. I continue to stay away from financials and companies dependent on the leverage they provide (REITs come to mind).

The Hard Trade Premium Newsletter is now available on our website HERE

Suttmeier Says
--Commentary and Analysis from Chief Market Strategist Richard Suttmeier
If you have any comments or questions, send them to Rsuttmeier@Gmail.com Treasury Yields 10-Year--(2.227) Semiannual, weekly, annual and quarterly value levels are 2.414, 2.428, 2.690 and 3.053 with daily and semiannual risky levels at 2.039 and 1.672. Commodities and Forex Comex Gold--($1773.3) Quarterly, semiannual and monthly value levels are $1655.8, $1644.8 and $1604.1 with weekly and daily risky levels at $1825.1 and $1857.1 and Tuesdays all time high at $1917.9. Nymex Crude-- ($84.96) My daily value level is $81.94 with the 200-week simple moving average is $83.89 and weekly risky level at $91.54, my annual pivots at $99.91 and $101.92 and quarterly and semiannual risky levels at $102.40 and $103.92. The Euro--(1.4376) My quarterly value level is 1.3728 with a daily pivot at 1.4345 and weekly and semiannual risky levels at 1.4492 and 1.4752.

Major Indices Equity Technicals The major equity averages have been in trading ranges since the August 9th FOMC meeting. If the equity ranges are broken to the upside the overhead resistance for the Dow is the Death Cross of the 50-day and 200-day simple moving averages at 11,961 and 11,988. Equity Fundamentals: Stocks are extremely undervalued. 85.5% of all stocks are undervalued / 14.5% of all stocks are overvalued. In March 2009, 91.1% of all stocks were undervalued. All sixteen sectors are undervalued, fifteen by double-digit percentages, twelve by 20.5% to 30.1%. Back in March 2009 the sectors were undervalued by 33% to 45%. Key Levels for the Major Equity Averages Dow -- (11,150) My daily value level is 10,801 with the 200-week and 120month simple moving averages are 10,714 and 10,568, my annual pivot at 11,491, and weekly risky level at 11,819. Semiannual value levels are 9,635 and 8,468. S&P 500--(1159.3) Semiannual value levels are 981.3 and 855.7 with a daily value level at 1114.0 and annual risky level at 1210.7. NASDAQ (2420) Daily and annual value levels are 2302 and 2335 with weekly risky level at 2637. NASDAQ 100 (NDX) (2108) Semiannual and annual value levels are 1951, 1861 and 1723 with a daily value level at 2013 and weekly risky level at 2309. Dow Transports (4344) Daily and semiannual value levels are 4071 and 3868 with my semiannual pivot at 4335, and weekly and annual risky levels at 4744 and 5179. Russell 2000 (674.43) Daily and semiannual value levels are 636.67, 577.47 and 530.04 with weekly and annual risky levels at 730.16 and 784.16. The SOX (336.33) Annual and semiannual value levels are 270.98, 258.97 and 204.67 with a daily value level at 317.45 and weekly risky level at 357.94.
Note: For my technical momentum metrics--"MOJO"--I use whats called 12x3x3 slow stochastic readings from daily, weekly and monthly charts. The scale is zero to 10.0 where above 8.0 is overbought and below 2.0 is oversold.

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