April 1, 2011

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VALUATION WATCH: Our models find that overvaluation is

approaching critical levels. Overvalued stocks now make up 62%
of our universe and 31% of the universe is calculated to be
overvalued by 20% or more. All Sectors are calculated to be
overvalued.

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 Internap Network Services
Corporation (Internap, INAP, $INAP). Internap is an Internet solutions and data
center company providing a suite of network optimization and delivery services and
products that manage, deliver and distribute applications. Its private network access
points (P-NAPs) feature multiple direct high-speed connections to major Internet
backbones, also referred to as network service providers (NSPs), such as Verizon
Communications Inc., Global Crossing Limited, Level 3 Communications, Inc., XO
Holdings Inc. and Cogent Communications Group, Inc.
A screen for undervalued/top-ranked one-month forecast stocks with market
prices in excess of $3.00 and average volume in excess of 100k shares/day performed
with our Institutional software package (VEI) found Internap near the top of the list.
Please Click Here to Download a FREE Demo of ValuEngine's Professional
VEI Software Package.

ValuEngine has issued a STRONG BUY recommendation for Internap on April 1,

2011. Based on the information we have gathered and our resulting research, we feel
that Internap has the probability to OUTPERFORM average market performance for
the next year. The company exhibits ATTRACTIVE expected EPS growth, 5-year
annualized return and market valuation.
Based on available data as of April 1, 2011, we believe that INAP should be
trading at $6.71. This makes INAP 2.15% undervalued. Fair Value indicates what we
believe the stock should be trading at today if the stock market were perfectly
efficient and everything traded at its true worth. For INAP, we base this on actual
earnings per share (EPS) for the previous four quarters of -$0.05, forecasted EPS for the
next four quarters of $0.04, and correlations to the 30- year Treasury bond yield of
4.51%.
Subscribers can check out the latest figures on Internap from our models HERE.
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for our no obligation, two-week free trial today.

Weekly Subscribers can download a FREE Detailed Valuation Report on

INAP HERE.

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Newsletter HERE.
MARKET OVERVIEW
Index started week Thursday Close 4 day change 4 day change % ytd
DJIA 12221.19 12319.7 98.51 0.81% 6.41%
NASDAQ 2752.33 2781.07 28.74 1.04% 3.90%
RUSSELL 2000 826.21 843.55 17.34 2.10% 6.30%
S&P 500 1315.45 1325.83 10.38 0.79% 5.42%

Summary of VE Stock Universe

Stocks Undervalued 37.87%
Stocks Overvalued 62.13%
Stocks Undervalued by 20% 16.29%
Stocks Overvalued by 20% 31.00%

SECTOR OVERVIEW
Sector Change MTD YTD Valuation Last 12- P/E
MReturn Ratio
Aerospace 0.41% 5.02% 15.79% 15.49% overvalued 27.02% 19
Auto-Tires-Trucks 0.45% 2.74% -1.87% 11.03% overvalued 37.29% 19.94
Basic Materials 0.54% 1.30% 0.48% 14.13% overvalued 52.99% 44.89
Business Services 0.29% 2.36% 4.59% 10.21% overvalued 15.07% 50.54
Computer and Technology 0.30% 2.51% 12.36% 9.50% overvalued 32.42% 41.22
Construction 0.02% 1.85% 1.87% 10.39% overvalued 11.64% 36.42
Consumer Discretionary 0.34% 1.67% 4.97% 11.08% overvalued 17.09% 32.52
Consumer Staples -0.52% -0.11% -0.65% 9.64% overvalued 14.67% 21.21
Finance 0.26% -0.24% 3.04% 8.36% overvalued 9.78% 26.46
Industrial Products 0.55% 3.62% 6.91% 11.09% overvalued 27.41% 35.97
Medical 0.16% 3.60% 11.78% 2.88% overvalued 15.31% 38.29
Multi-Sector Conglomerates 0.34% 4.09% 5.65% 17.88% overvalued 29.03% 28.28
Oils-Energy 0.32% 3.77% 13.38% 27.60% overvalued 46.85% 46.89
Retail-Wholesale -0.24% 4.20% 4.97% 8.67% overvalued 20.85% 24.82
Transportation 0.25% 4.33% 0.89% 13.47% overvalued 22.74% 21.78
Utilities 0.38% 3.06% 4.22% 11.06% overvalued 16.95% 21.91
Sector Talk—Aerospace
Over the past few weeks there have been a lot of things going "BOOM" in the
desert thanks to the imposition of a U.N. "no-fly zone" over Libya. These things cost
money, lots of money. Sooner or later they will need to be replaced. It therefore
seems apropos to take a look at our rankings for the Aerospace sector for this week's
sector talk. Below, we present the latest data on the Aerospace Sector 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 Aerospace Stocks--Short-Term Forecast Returns
Ticker Name Mkt Price Valuation(%) Last 12-M
Retn(%)
ATK ALLIANT TECHSYS 70.67 1 -12.83
LDSH LADISH COMPANY 54.65 106.93 171.08
NOC NORTHROP GRUMMN 62.71 -9.63 -1.34
ESL ESTERLINE TECHN 70.72 28.16 43.07
LLL L-3 COMM HLDGS 78.31 -7.35 -12.69

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

Ticker Name Mkt Price Valuation(%) Last 12-M
Retn(%)
ATK ALLIANT TECHSYS 70.67 1 -12.83
NOC NORTHROP GRUMMN 62.71 -9.63 -1.34
LLL L-3 COMM HLDGS 78.31 -7.35 -12.69
RTN RAYTHEON CO 50.87 -2.21 -8.16
LMT LOCKHEED MARTIN 80.4 13.91 0.26

Top-Five Aerospace Stocks--Composite Score

Ticker Name Mkt Price Valuation(%) Last 12-M
Retn(%)
NOC NORTHROP GRUMMN 62.71 -9.63 -1.34
LLL L-3 COMM HLDGS 78.31 -7.35 -12.69
RTN RAYTHEON CO 50.87 -2.21 -8.16
GR GOODRICH CORP 85.53 8.21 23.06
LMT LOCKHEED MARTIN 80.4 13.91 0.26
Top-Five Aerospace Stocks--Most Overvalued
Ticker Name Mkt Price Valuation(%) Last 12-M
Retn(%)
LDSH LADISH COMPANY 54.65 106.93 171.08
HEI HEICO CORP 62.52 47.16 52.01
GTEC GLOBAL DEFENSE 24.22 42.63 80.75
TDG TRANSDIGM GROUP 83.83 40.19 58.05
SPR SPIRIT AEROSYS 25.67 38.14 9.79

Subscribers can check out the latest valuation, forecast, and ratings figures on
the Basic Materials Sector from our Models HERE.
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Valuation and Forecast Models continue to provide investors with accurate,
objective, and timely information on more than 5,700 US stocks, ADRs, and foreign
equities that trade on US markets. Over the last few months, our stock picks have
provided clients with many winners in both up and down periods

What's Hot----Valuation Watch is Back!

ValuEngine Market Valuation Figures Inch into the Danger Zone (Again...)
The ValuEngine Valuation Model tracks more than 5500 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 track valuation figures and use them as a metric for making calls about the
overall state of the market. As of last night's close, our overall universe overvaluation
and overvalued by 20% or more figures have reaches levels which have been
correlated with market dips in the past.
Whenever we see levels in overvaluation levels in excess of @ 60% for the
overall universe and 27.5% for the overvalued by 20% or more categories, we issue a
valuation watch. This is a time for investors to keep a close eye and the market and to
consider booking some profits and perhaps hedging against a move to the
downside.
 We recently called off a Valuation Watch which had been in effect since
December 15, 2010. We began that Valuation Watch with the SP 500 at 1241 and
called it off with the benchmark around 1275. Over the period of this Valuation
Watch, we issued Valuation Warnings whenever our overall universe overvaluation
figure exceeded 64.5%. We issued a total of 14 warnings during this period.
We issued our latest Valuation Watch with the SP 500 at the 1319 level and the
overall universe valuation figure at 60.89%. Of course, as always past performance is
no indication of future behavior. Given the wild gyrations of the markets over the past
few years, it has been tough to rely completely on any fundamentally or technically-
based mode of analysis. As always, shorting in a bubble can kill and must be utilized
prudently.
In addition to the overall valuation metrics, we see that on a sector basis ALL
sectors are calculated to be overvalued. In the past, our Chief Market Strategist
Richard Suttmeier has used the sector valuation figures to buttress his macro market
calls. Almost 13 of the sectors are calculated to be overvalued by almost 10% or
more. This is another indicator that stocks are no longer a bargain and that investors
should consider implementing additional risk management tools and/or booking
some profits.

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-- (3.454) Daily, weekly, annual and quarterly value levels
are 3.530, 3.641, 3.796 and 4.016 with monthly, annual, and
semiannual risky levels at, 3.181, 2.690, 2.441, and 2.322. The
monthly chart favors an up trend for yields beginning with the December 2008 low
yield at 2.016. This corresponds to when the Federal Reserve cut the funds rate to zero
to 0.25%. The up trend goes through the low yield at 2.334 set in October 2010 in the
midst of the QE2 hype.
Commodities and Forex

Comex Gold-- ($1434.60) Annual, semiannual and annual value levels are $1356.5,
$1300.6 and $1187.2 with a daily pivot at 1429.1, and semiannual, weekly, quarterly
and monthly risky levels at $1452.6, $1469.8, 1523.7 and 1559.9. The monthly chart is
overbought and the price pattern looks like a parabolic rise that accelerated as the
Fed cut the funds rate to zero in mid-December 2008.

Nymex Crude-- ($106.65) My annual and monthly value levels are $101.92, $101.09
and $99.91 with a weekly pivot at $105.31, and semiannual, daily and quarterly risky
levels at $107.14, $108.20, $114.27 and $120.52. The semiannual level at $107.14 was
tested overnight and is now a pivot. The monthly chart is overbought and oil was as
low as $33.20 per barrel just after the Fed cut the funds rate to zero percent. A zero
percent funds rate was clearly a license for traders to speculate.

The Euro-- (1.4167) My quarterly value level is 1.3401 with daily, weekly and monthly
pivots at 1.4051, 1.4119 and 1.4190 with quarterly and semiannual risky levels at 1.4308
and 1.4624. The euro tested its 120-month simple moving average at 1.2085 in June
2010.

Major Indices

Tracking Dow Theory - The Dow Transports ended March with a daily close
above its February 17th closing high at 5298.10. This is just a fractionally higher close at
5299.89, so the Dow Industrial Average needs to follow with a close above its
February 18th closing high at 12,391.25 today to confirm a Dow Theory Buy Signal. The
other major averages that remain below their February highs are; S&P 500 by 1.4%,
NASDAQ by 2.1%, NASDAQ 100 by 2.7% and the SOX by 7.8%. The Russell 2000 is 0.7%
above its February high.

The Trading Range Scenario – The Dow Industrial Average remains in a trading
range between its March 16th low at 11,555.48 and its February 18th high at 12,391.29.
Strength can stretch to my new monthly risky level at 12,481, which would still be a
high below 12,600. The downside risk remains my annual value level at 11,491.
Key Levels for the Major Equity Averages

S&P 500 – (1325.8) My quarterly and annual value levels are 1277.7 and 1210.7
with daily, weekly and monthly risky levels at 1329.2, 1353.7 and 1360.0.
Semiannual value levels are 1151.1 and 967.3 with quarterly and annual risky
levels at 1500.4 and 1562.9.

NASDAQ – (2781) Semiannual and annual value levels are 2363 and 2335 with
daily, weekly and monthly risky levels at 2794, 2830 and 2898. My semiannual
value level is 2172 with quarterly and annual risky levels at 3209 and 3243.

NASDAQ 100 (NDX) – (2339) Semiannual, and annual value levels are 2006,
1928 and 1723 with daily, weekly, monthly, annual and quarterly risky levels at
2359, 2389, 2477, 2590 and 2685.

Dow -- (12,320) Annual and semiannual value levels are 11,491, 10,959, and
9,449 with monthly, quarterly and annual risky levels at 12,481, 13,774 and
13,890. We show overbought technical momentum with the 120-month simple
moving average as support at 10,500.

Dow Utilities – (413.06) My semiannual value level is 397.84 with daily and weekly
pivots at 412.49 and 411.78 and monthly and quarterly risky levels at 423.25 and
448.17. Semiannual and annual risky levels are 452.17, 458.28 and 579.22.

Dow Transports – (5300) Quarterly and semiannual value levels are 4714, 4264
and 3774 with annual, daily, weekly and monthly pivots at 5179, 5264, 5295 and
5371, and annual and quarterly risky levels at 6131 and 6148.

Russell 2000 – (843.55) Annual and quarterly value levels are 784.16 and 778.81
with a daily pivot at 840.22, and monthly and weekly risky levels at 856.67 and
857.75. Semiannual value levels are 631.62 and 567.74 with quarterly and
annual risky levels at 949.02 and 978.58.

The SOX – (437.36) Semiannual and annual value levels are 296.89, 270.98 and
259.30 with daily, monthly, weekly, quarterly and annual risky levels at 443.74,
452.34, 459.29, 498.75 and 531.14.
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