August 31, 2012

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The ValuEngine Weekly is an Investor Education newsletter focused on the quantitative approach to investing and the tools available from ValuEngine.com. 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. If you are not yet a member of ValuEngine's stock analysis service, sign up now for a two-week free trial at www.valuengine.com!

MARKET OVERVIEW

Index
DJIA NASDAQ RUSSELL 2000 S&P 500

Week Open
13157.74 3083.62 811.91 1411.13

Thurs. Close
13000.7 3048.71 808.64 1399.48

Change
-157.04 -34.91 -3.27 -11.65

% Change
-1.19% -1.13% -0.40% -0.83%

YTD
6.38% 4.85% 2.35% 11.17%

Summary of VE Stock Universe

Stocks Undervalued Stocks Overvalued Stocks Undervalued by 20% Stocks Overvalued by 20% 63.45% 36.55% 29.66% 12.68%

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
-0.23% -1.32% -1.77% -0.77% -1.03% -0.82% -0.87% -0.69% -0.57% -0.94% -0.63% -1.33% -1.42% -0.59% -0.88% -1.04%

MTD
2.50% 1.55% 3.23% 1.47% 3.75% 3.51% 0.99% 3.02% 6.22% 1.42% 3.98% 1.08% 0.31% 1.63% -1.74% -0.84%

YTD
2.76% 1.32% -2.01% 6.25% 6.22% 85.72% 12.59% 13.34% 21.44% 1.73% 17.27% 8.72% -8.97% 12.49% 5.98% 0.03%

Valuation
5.47% undervalued 12.43% undervalued 10.59% undervalued 2.65% undervalued 4.35% overvalued 3.62% overvalued 2.28% undervalued 8.42% overvalued 7.37% overvalued 2.28% undervalued 6.74% overvalued 8.01% undervalued 5.01% undervalued 4.79% overvalued 4.59% undervalued 11.86% overvalued

Last 12MReturn
-2.12% -6.34% -30.72% 5.30% -3.35% 12.57% 1.51% 3.86% 8.34% -5.39% 0.20% 4.41% -16.32% 13.64% -9.06% 0.16%

P/E Ratio
23.32 17.26 25.74 23.75 42.2 29.63 28.2 19.61 19.12 21.94 41.51 14.75 35.97 24.93 17.57 18.05

Sector TalkConsumer Discretionary

Below, we present the latest data on leading Consumer Discretionary 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 Consumer Discretionary Sector Stocks--Short-Term Forecast Returns

Ticker
SWHC ESI CKEC DIS CHH

Name
SMITH & WESSON ITT EDUCATIONAL CARMIKE CINEMA DISNEY WALT CHOICE HTL INTL

Mkt Price
8.06 30.9 11.89 49.42 31.68

Valuation(%)
-23.14 -65.19 -15.18 -2.07 -20.51

Last 12-M Retn(%)

148 -57.51 72.32 49.62 4.31

Top-Five Consumer Discretionary Sector Stocks--Long-Term Forecast Returns

Ticker
CMCSA CMCSK DIS LF DISH

Name
COMCAST CORP A COMCAST CLA SPL DISNEY WALT LEAPFROG ENTRPS DISH NETWORK CP

Mkt Price
33.63 32.83 49.42 11.01 31.84

Valuation(%)
19.62 31.67 -2.07 71.2 27.88

Last 12-M Retn(%)

61.06 59.6 49.62 230.63 48.02

Top-Five Consumer Discretionary Sector Stocks--Composite Score

Ticker
TWX SWHC TWC DIS LINTA

Name
TIME WARNER INC SMITH & WESSON TIME WARNER CAB DISNEY WALT LIBERTY M INT-A

Mkt Price
41.48 8.06 88.84 49.42 18.1

Valuation(%)
-8.99 -23.14 -10.8 -2.07 -56.58

Last 12-M Retn(%)

35.6 148 38.75 49.62 14.2

Top-Five Consumer Discretionary Sector Stocks--Most Overvalued

Ticker
WWE ELY LF SKX LBTYA

Name
WORLD WRESTLING CALLAWAY GOLF LEAPFROG ENTRPS SKECHERS USA-A LIBERTY GLBL-A

Mkt Price
8.53 5.74 11.01 21.55 54.9

Valuation(%)
300 112.33 71.2 53.85 43.13

Last 12-M Retn(%)

-6.16 3.05 230.63 29.66 39.87

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Free Report Download for Subscribers

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 Wells Fargo. (WFC). Wells Fargo & Company is a diversified financial services company providing banking, insurance, investments, mortgage and consumer finance services through stores, its Internet site and other distribution channels across North America as well as internationally. The company has weathered the financial crisis better than most large banks and is currently in the news as a key holding of investment guru Warren Buffett. Wells Fargo's strong recent performance has helped Buffett's Berkshire Hathaway perform much better this year.

Weekly Subscribers can download a FREE Detailed Valuation Report on Wells Fargo 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.

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What's HotValuation
It's time for our monthly look at our overall market valuation figures. The ValuEngine Valuation Model tracks more than 8000 US equities, ADRs, and foreign stock which trade on US exchanges. The model calculates a level of mispricing or valuation percentage for each equity based on what the stock should be worth if the market were totally rational and efficient--an academic exercise to be sure, but one which allows for useful comparisons between equities, sectors, and industries. We use this metric to get an overall snapshot of the market and to discern if stocks are a bargain or overpriced. In the past, the valuation figures have correlated fairly well to market tops and have signaled impending pull backs. Subscribers Get FULL ACCESS to our Market and Sector Overviews Sell in May and Go Away is maxim for the markets except in US presidential election years. So far this Summer, it appears as though that trend is holding. In the chart below, you can see that our Valuation Model finds that the market is in a range of undervaluation just above what we would consider "normal." Technically, things seem to be topping out, but in an election year and with a potential QE III on the horizon, who knows? Whenever we see overvaluation levels in excess of @ 60% for the overall universe, we issue a valuation watch. We do not have a similar metric for the undervaluation levels, but we generally find that when stocks are calculated to be more than 75% undervalued overall it is time to do some bargain hunting. We have yet to see the overvaluation levels we achieved back in March. So far this year, we don't see any real creep up in overvaluation at all.

For reference, here is a longer-term chart which tracks the metrics back to March, 2010. Note that undervaluation levels peaked in excess of 90% last Summer. As you can see, the market levels are equal to or higher than they were in the past at times when we did issue overvaluation watches. Always remember that the valuation model adjusts to both individual company earnings and stock prices, so you may not see the same under or overvaluation levels at similar market levels.

And finally, here is the chart tracking the levels back to March, 2007.

We will continue to watch and track our valuation metrics so that we may add to our data set.

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--(1.625) Semiannual, quarterly and annual value levels are 1.853, 1.869 and 2.502 with daily, weekly, monthly and semiannual risky levels at 1.545, 1.561, 1.468 and 1.389. This yield is trading between the 50-day simple moving average at 1.595% and the 200-day at 1.849%. Weekly closes with the yield above the five-week modified moving average at 1.649 favors higher yields. Commodities and Forex Comex Gold ($1658.3) Semiannual, weekly, annual and monthly value levels are $1643.3, $1638.1, $1575.8 and $1525.3 with daily, semiannual and quarterly risky levels at $1700.7, $1702.5 and $1805.8. Below is my second annual risky level at $1388.4. The 200-day simple moving average is at support at $1646.4. The weekly chart stays positive on a weekly close above the five-week modified moving average at $1620.6. Nymex Crude Oil ($94.75) My monthly and semiannual value levels are $90.40 and $76.71 with a daily pivot at $95.74, and weekly, annual and quarterly risky levels at $98.60, $103.58 and $107.63. The 200-day simple moving average is a pivot at $96.70. The weekly chart stays positive on a weekly close above the five-week modified moving average at $92.08. The Euro (1.2506) Monthly and weekly value levels are 1.2237 and 1.2006 with a daily risky level at 1.2684. My semiannual value level is 1.1078 with a semiannual risky level at 1.2917. The 50-day simple moving average is 1.2364 with the 200-day at 1.2861. The weekly chart stays positive on a weekly close above the five-week modified moving average at 1.2406.

Major Indices Daily Dow:(13,001) Daily, annual and semiannual value levels are 12,935, 12,312 and 10,738 with weekly, monthly, annual and quarterly risky levels at 13,196, 13,625, 14,032 and 14,493. The weekly chart profile stays positive on a weekly close above the five-week modified moving average at 13,035. S&P 500 (1399.5) Daily and annual value levels are 1397.2 and 1363.2 with a weekly pivot at 1415.0, and monthly risky level at 1458.2. My semiannual value level is 1059.7. The weekly chart profile stays positive on a weekly close above the five-week modified moving average at 1387.3. NASDAQ (3049) Annual and semiannual value levels are 2698 and 2527 with weekly and daily pivots at 3050 and 3056, and monthly and annual risky levels at 3194 and 3232. The weekly chart profile stays positive on a weekly close above the five-week modified moving average at 2992. NASDAQ 100 (NDX) (2754) Annual and semiannual value levels are 2603, 2300 and 2239 with weekly and daily pivots at 2761 and 2762, and monthly and quarterly risky levels at 2877 and 2991. The weekly chart profile stays positive on a weekly close above the five-week modified moving average at 2690. Dow Transports (4993) Daily and semiannual value levels are 4981, 4449 and 4129 with a weekly pivot at 5051, and my monthly risky level at 5373. The weekly chart profile shifts back to positive on a weekly close above the five-week modified moving average at 5124. The all time high is 5627.85 set on July 7, 2011. Russell 2000 (808.65) Daily and semiannual value levels are 806.35 and 686.25 with monthly risky levels at 836.15 and 846.16. The weekly chart profile stays positive with a weekly close above the five-week modified moving average at 800.00. The all time high is 868.57 set on May 2, 2011. The SOX (390.70) Daily and weekly pivots are 391.13 and 388.18 with monthly and quarterly risky levels at 420.20 and 450.28. Fell back below its 200-day simple moving average at 393.33. The weekly chart profile stays positive on a weekly close above the five-week modified moving average at 390.40.

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We provide a variety of means for accessing ValuEngine market analysis and other content. You can find us on some of the leading financial media websites as well as the more popular social media services. While our own website ValuEngine.com provides access to lots of analysis--and you can always sign up to receive email daily and weekly bulletins HERE, some users prefer to download PDF reports of content while others prefer to garner info while browsing the web. Our Chief Market Strategist Richard Suttmeier is a prolific market observer and you can find his content in a variety of places. His weekly column on Forbes provides insights into his "Buy and Trade" strategy while his daily market analysis can be followed and accessed at Scribd, Twitter, and Minyanville. Senior Editor Steve Hach re-posts PDFs and web-accessible copies of Daily and Weekly ValuEngine bulletins at Seeking Alpha and Scribd. In most cases, you can receive notification of VE content posting by Suttmeier and Hach by following the ValuEngine feed on twitter @ValuEngine. Links for this content are provided below, you may also find these links on our website HERE Intelligent Investing with Richard Suttmeier Articles by Richard Suttmeier | Articles by Steve Hach Newsletters, Articles and Other Research Pieces Articles by Richard Suttmeier | Articles by Steve Hach Get short, timely messages from ValuEngine Inc Daily Bulletin PDFs, Weekly Newsletter PDFs, and PDF Research Reports