January 7, 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!
NO OBLIGATION, TWO WEEK FREE TRIAL!
CLICK HERE

VALUATION WARNING: Our models find that overvaluation is approaching

levels typically seen when a market correction is imminent. Overvalued
stocks now make up 65% of our universe and more than 33% of the
universe is calculated to be overvalued by 20% or more. 15 of 16 Sectors
are now calculated to be overvalued.

Bonus for Readers

--Free Individual Stock Report for Weekly Newsletter
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 Melco Crown Entertainment
(MPEL). This week we reported on a variety of our Forecast Model's recent success
stories. Melco Crown was one of them. When we completed our last re-balance of
the ValuEngine Forecast Model Market Neutral Strategy Portfolio Newsletter,
subscribers received two picks from the Consumer Discretionary Sector.
The first pick, Hyatt Hotels (H) is up more than 5%. The second pick, Melco
Crown is an owner and developer of casino gaming and entertainment resort
facilities focused on the market found in Macau. Since being selected as one of our
top two stocks in the sector 21 days ago, Melco Crown Entertainment is up more than
22%.
 Currently, ValuEngine maintains its BUY recommendation for Melco Crown
Entertainment. Based on the information we have gathered and our resulting
research, we feel that Melco Crown Entertainment has the probability to
OUTPERFORM average market performance for the next year. The company exhibits
ATTRACTIVE momentum, company size and expected EPS growth.

Based on available data as of today, we believe that MPEL should be trading

at $6.05. This makes MPEL 13.60% overvalued. 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 MPEL, we base this on actual earnings per
share (EPS) for the previous four quarters of -$0.15, forecasted EPS for the next four
quarters of -$0.05, and correlations to the 30- year Treasury bond yield of 4.53%.

Weekly Subscribers can download a FREE Detailed Valuation Report on MPEL 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.

MARKET OVERVIEW
Index started week Thursday Close 4 day change 4 day change % ytd
DJIA 11577.43 11697.31 119.88 1.04% 0.88%
NASDAQ 2676.65 2709.89 33.24 1.24% 1.92%
RUSSELL 2000 793.54 791.42 -2.12 -0.27% 1.07%
S&P 500 1257.62 1273.85 16.23 1.29% 1.01%

Summary of VE Stock Universe

Stocks Undervalued 35.46%
Stocks Overvalued 64.54%
Stocks Undervalued by 20% 16.18%
Stocks Overvalued by 20% 32.27%
SECTOR OVERVIEW
Sector Change MTD YTD Valuation Last 12- P/E
MReturn Ratio
Aerospace 0.94% 1.77% 1.77% 12.46% overvalued 32.96% 20.62
Auto-Tires-Trucks -0.71% 1.13% 1.13% 17.88% overvalued 44.18% 26.67
Basic Materials -1.35% -2.67% -2.67% 30.54% overvalued 54.70% 37.21
Business Services 0.02% 0.85% 0.85% 9.02% overvalued 19.00% 30.17
Computer and Technology 0.33% 7.71% 1.41% 11.92% overvalued 32.59% 44.85
Construction 0.33% 0.06% 0.06% 8.85% overvalued 10.33% 38.69
Consumer Discretionary -0.38% 0.14% 0.14% 8.23% overvalued 23.98% 31.54
Consumer Staples -0.31% -1.04% -1.04% 11.84% overvalued 16.32% 27.83
Finance -0.22% -0.04% -0.04% 10.05% overvalued 19.09% 25.31
Industrial Products -0.29% -0.56% -0.56% 17.97% overvalued 28.70% 26.39
Medical 0.10% 0.66% 0.66% 1.44% undervalued 18.49% 37.82
Multi-Sector Conglomerates -0.53% -0.19% -0.19% 18.21% overvalued 29.93% 30.41
Oils-Energy -0.61% -0.46% -0.46% 28.09% overvalued 28.94% 41.67
Retail-Wholesale -0.78% -1.20% -1.20% 10.17% overvalued 52.71% 22.19
Transportation -0.27% 0.07% 0.07% 15.98% overvalued 28.84% 42.97
Utilities -0.55% -0.75% -0.75% 8.83% overvalued 12.30% 25.61

Sector Talk-- Computers and Technology

Below, we present top-five lists for the Computers and Technology 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 Computers and Technology Stocks--Short-Term Forecast Returns

Last 12-M
Ticker Name Mkt Price Valuation(%)
Retn(%)
SATC SATCON TECH CRP 4.94 -32.34 78.34
INFN INFINERA CORP 11.06 16.58 21.41
SNIC SONIC SOLUTIONS 14.88 83.34 27.51
ZSTN ZST DIGITAL NET 6.74 1.35 -29.42
TSTC TELESTONE TECH 10.35 4.54 -57.13
Top-Five Computers and Technology Stocks--Long-Term Forecast Returns
Last 12-M
Ticker Name Mkt Price Valuation(%)
Retn(%)
SATC SATCON TECH CRP 4.94 -32.34 78.34
INFN INFINERA CORP 11.06 16.58 21.41
SNIC SONIC SOLUTIONS 14.88 83.34 27.51
ZSTN ZST DIGITAL NET 6.74 1.35 -29.42
TSTC TELESTONE TECH 10.35 4.54 -57.13

Top-Five Computers and Technology Stocks--Composite Score

Last 12-M
Ticker Name Mkt Price Valuation(%)
Retn(%)
LXK LEXMARK INTL 35.05 -29.62 31.42
XRX XEROX CORP 11.46 -18.21 36.27
ICGE INTERNET CAP GP 13.74 -75 115.7
XRTX XYRATEX LTD 17.12 -20.83 25.42
NCR NCR CORP-NEW 16.62 -47.43 43.77

Top-Five Computers and Technology Stocks--Most Overvalued

Last 12-M
Ticker Name Mkt Price Valuation(%)
Retn(%)
MSI MOTOROLA INC 39.68 256.79 17.4
ARMH ARM HOLDNGS ADR 21.78 157.84 140.93
MIPS MIPS TECH INC 17.34 141.94 285.33
TMRK TERREMARK WRLWD 14.08 126.25 88.99
N NETSUITE INC 28.59 116.12 77.36

Subscribers can check out the latest valuation, forecast, and ratings figures on
the Computers and Technology Sector from our Models HERE.
Not a ValuEngine Premium Website member? Then please consider signing up
for our no obligation, two-week free trial today. ValuEngine's award-winning stock
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
 To Sign Up for a FREE TRIAL, Please Click the Logo Below

What's Hot--
ValuEngine Chief Market Strategist Richard Suttmeier On the Road in
January
ValuEngine Chief Market Strategist Richard Suttmeier is a financial analyst for media such as Fox News,
CNBC,YahooFinance,the Wall Street Journal, New York
Times, CNNfn, and Bloomberg, Suttmeier has long been
one of ValuEngine's "power users," supporting his own
technically-focused analysis with VE's fundamentally-
based quant methods.

With all of the recent market

uncertainties, making the correct stock
decisions can be daunting. ValuEngine Chief
Market Strategist Richard Suttmeier will be
appearing at the AAII Orlando Chapter
meeting on January 19, 2011. We invite all VE
clients in Florida to attend. At the meeting,
Suttmeier will discuss the following topics:

• How ValuEngine.com can help investors adapt to volatile and risky market conditions
• How to implement a hedge fund-type strategy for your own stock investment portfolio
• How ValuEngine’s research helped me call both the top and the bottom of the market over the
past five years
 This meeting will take place at the University Club of Winter Park, 841 N. Park
Ave. Winter Park, FL 32789. It starts at 6:30pm. Again, all VE clients are invited. We
place a special call out to those seeking individual investment advice, assistance,
and portfolio management.

ValuEngine Model Calculations Show Overvaluation Hitting Critical Levels

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 market overvaluation
and overvalued by 20% or more figures have reached levels strongly correlated with
market corrections in the past.

Whenever we see levels in overvaluation levels in excess of @ 65% for the

overall universe and 30% for the overvalued by 20% or more categories, we issue a
valuation warning. ValuEngine issued a market valuation watch on December
15th. Since then the market has continued to climb and our models have only
increased the levels of calculated overvaluation. We hit the 65%/30% metric
yesterday.

Based on the latest model calculations, ValuEngine has issued a market

valuation warning. We reiterate again that this is a time for investors to keep a close
eye on the market, tighten their stop losses, book some profits, and hedge against a
move to the downside.
 This chart shows overall universe valuation in excess of 60% vs the S&P 500 from
the end of March 2010 to the present:

This chart shows universe overvalued by 20% or more levels in excess of 27% vs
the S&P 500 from the end of March 2010 to the present:
 In addition to the overall valuation metrics, we see that on a sector basis 15 of
16 sectors are calculated to be overvalued. As you can see from the chart below,
the level of overvaluation for many sectors has also increased since we issued our
valuation watch December 15th.

Sector 12/15/2010 1/7/2011

Aerospace 7.51% overvalued 12.46% overvalued
Auto-Tires-Trucks 14.28% overvalued 17.88% overvalued
Basic Materials 29.55% overvalued 30.54% overvalued
Business Services 6.52% overvalued 9.02% overvalued
Computer and Technology 7.22% overvalued 11.92% overvalued
Construction 5.94% overvalued 8.85% overvalued
Consumer Discretionary 6.24% overvalued 8.23% overvalued
Consumer Staples 11.45% overvalued 11.84% overvalued
Finance 7.25% overvalued 10.05% overvalued
Industrial Products 15.30% overvalued 17.97% overvalued
Medical 5.48% undervalued 1.44% undervalued
Multi-Sector Conglomerates 14.70% overvalued 18.21% overvalued
Oils-Energy 22.95% overvalued 28.09% overvalued
Retail-Wholesale 9.36% overvalued 10.17% overvalued
Transportation 12.04% overvalued 15.98% overvalued
Utilities 8.23% overvalued 8.83% overvalued
SP 500 1241.59 1273.85

VAL WATCH VAL WARNING

In the past, our Chief Market Strategist Richard Suttmeier has used the sector
valuation figures to buttress his macro market calls. Almost 14 of the 16 sectors are
calculated to be overvalued by 10% or more.
This is another indicator that stocks are no longer the bargain they were a few
months ago and that investors should consider implementing additional risk
management tools and/or booking some profits.
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. But as
you can see from the charts below, the overvalued indicator has been fairly robust
and thus must be considered as we move forward.
 This chart shows universe overvaluation figures in excess of 60% vs the S&P 500
from 1991 up until today:

This chart shows universe overvalued by 20% or more levels in excess of 30% vs
the S&P 500 from 1991 up until today:
 As you can see from the charts, in many cases in the past the spikes in
overvaluation--particularly the overvalued by 20% or more metric--provided a timely
signal of an impending correction.
Our most recent valuation watch occurred in late April 2010, just as the market
headed down for the Summer.
ValuEngine offers clients several newsletters which can help to mitigate the
overall downside risk to their portfolios. Richard Suttmeier's ValuTrader Newsletter
includes some hedging via the use of popular short ETFs and Suttmeier allocates
money long or short depending on his read of the overall macro environment. The
ValuEngine Forecast Model Market Neutral Strategy Portfolio Newsletter includes both
a long and short side so that subscribers may garner lower volatility than a long only
portfolio can provide.

With Richard Suttmeier's ValuTrader Newsletter Portfolio, you get timely stock picks
and a strategy designed to profit from today's volatile market environment.
Click HERE to Sign Up for Richard Suttmeier's ValuTrader Newsletter Portfolio

With the ValuEngine Forecast Model Market Neutral Strategy Newsletter, you can
run your own portfolio like a hedge fund to manage risk and profit in any market
environment.
Click HERE to Sign Up for the ValuEngine Forecast Model MNS Newsletter
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-- ((3.417) Weekly, annual and semiannual value levels are
3.714, 3.791 and 4.268 with a daily pivot at 3.424. Annual,
semiannual and monthly risky levels are 2.690, 2.441, 2.322 and
2.150.
My prediction is that yields will decline again with the 10-Year yield declining to
my annual risky level at 2.690. My annual value level is 3.791. Wall Street is bearish on
US Treasuries. I disagree just like last year and it appears that the 10-Year yield can fall
to a test of its 200-day simple moving average at 3.057.

Commodities and Forex

Comex Gold-- ($1371.9) Annual, semiannual and annual value levels are $1356.5,
$1300.6 and $1187.2. My weekly pivot is at $1380.0. Daily, monthly, quarterly and
semiannual risky levels are $1406.1, $1439.0, $1441.7 and $1452.6. Comex Gold has
gone parabolic and therefore you cannot predict how high gold prices can climb.
Gold needs a weekly close above my semiannual risky level at $1452.6 to
continue inflating the parabolic bubble, which become harder now that my
prediction has been achieved. My prediction is that there will be a test of my annual
value level at $1356.5 if not lower in 2011. Gold is below the 50-day simple moving
average at $1380.6 for the first since August 11th.

Nymex Crude-- ($88.32) Semiannual and monthly value levels are $87.52 and $75.74
with weekly and daily pivots at $88.50 and $89.44. Weekly closes above $87.52 targets
annual, semiannual and quarterly risky levels at $99.91, $101.92, $107.14 and $110.87.

The Euro--(1.3012) Monthly and weekly value levels are 1.2805 and 1.2703 with
quarterly and daily pivots at 1.3227 and 1.3244, and semiannual and annual risky
levels at 1.4624, 1.4989, 1.6367 and 1.7312. The euro is below its 200-day simple
moving average at 1.3079. The euro versus the dollar formed a trading range in
November trading range of 1.2972 to 1.4281. My prediction is that the euro will have a
weekly close below my quarterly pivot at 1.3227 resulting in a trend below 1.2972. The
euro traded below 1.2972 overnight and into this morning’s trading.
Major Indices
Everyone is bullish on stocks today, just like everyone was bearish in March 2009,
when I projected a rally of 40% to 50%. I was wrong - the Dow is now 80.8% above the
March 2009 low with the NASDAQ up 114.1% from those lows. Consider the following
data:

• In March 2009, 91% of all stocks were calculated to be undervalued by our

Valuation Model. Today the figure is less than 35%.

• In March 2009, 76% of all stocks were calculated to be more than 20%
undervalued. Today the figure is only 16.1%.

• In March 2009, all sectors were calculated to be extremely undervalued,

today 15 of 16 sectors are overvalued with almost 14 of them overvalued by
10% or more.

• In March 2009, stocks were extremely oversold, today the weekly slow
stochastic (MOJO) is 9.3 on a scale of 0.0 to 10.0-- a reading above 8.0 is
overbought.
The Dow--
Daily: (11,697) Annual, quarterly, weekly, semiannual, monthly and semiannual
value levels are 11,491, 11,395, 11,334, 10,959, 10,427 and 9,449 with a daily risky level
at 11,732, and annual risky level at 13,890.
The major equity averages straddle quarterly value levels, pivots and risky levels
favoring a reversal-oriented first quarter – 11,395 Dow, 1162.5 SPX, 2853 NASDAQ, 4671
Transports and 765.50 Russell 2000. The key risky level is thus on the NASDAQ, so if the
other major averages start to cascade below their quarterly levels before the
NASDAQ leads, the downside on the Dow is my semiannual value level at 9,449.