February 24, 2012

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MARKET OVERVIEW

Index
DJIA NASDAQ RUSSELL 2000 S&P 500

started week
12949.34 2957.3 830.1 1361.22

Thursday Close
12984.7 2956.98 829.23 1363.46

3 day change
35.36 -0.32 -0.87 2.24

3 day change %
0.27% -0.01% -0.10% 0.16%

ytd
6.28% 13.51% 11.92% 8.42%

Summary of VE Stock Universe

Stocks Undervalued Stocks Overvalued Stocks Undervalued by 20% Stocks Overvalued by 20% 53.85% 46.15% 21.40% 17.76%

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
-0.14% 0.29% 0.74% 0.90% 0.60% 1.25% 0.83% 0.03% 0.88% 0.50% 1.08% 0.52% 0.25% 0.86% 0.48% 0.65%

MTD
0.15% 4.86% 2.04% 2.09% 4.24% 4.60% 4.35% 2.73% 3.34% 3.12% 3.09% 2.40% 6.18% 4.23% 5.13% 2.23%

YTD
6.39% 19.37% 14.06% 10.07% 14.97% 16.36% 13.00% 7.24% 10.99% 13.76% 11.24% 12.57% 10.89% 11.35% 13.92% 3.82%

Valuation
11.78% overvalued 3.53% overvalued 8.38% overvalued 6.56% overvalued 19.56% overvalued 1.65% undervalued 4.32% overvalued 11.55% overvalued 18.92% overvalued 12.69% overvalued 17.25% overvalued 17.54% overvalued 11.11% overvalued 18.48% overvalued 8.82% overvalued 12.51% overvalued

Last 12MReturn
-2.91% -7.03% -19.98% -0.80% -10.10% -10.22% -3.30% -3.73% -2.35% -7.41% -7.24% -1.27% -17.56% 7.46% -12.84% 1.93%

P/E Ratio
28.74 31.99 22.67 25.08 43.16 31.01 28.04 23.36 22.41 26.89 40.06 16.26 41.28 21.75 21.61 24.94

Sector TalkOil and Energy

Below, we present the latest data on leading Oil and Energy 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 Oils and Energy Sector Stocks--Short-Term Forecast Returns

Ticker
BRGYY SGY HFC ATLS CPE

Name
BG GRP PLC-ADR STONE ENERGY CP HOLLYFRONTIER ATLAS ENERGY LP CALLON PETE-DEL

Mkt Price
23.98 34.19 35.2 26.26 7.65

Valuation(%)
-73.5 -2.39 -5.4 -3.93 -29.85

Last 12-M Retn(%)

2.79 29.95 28.84 83.38 -1.92

Top-Five Oils and Energy Stocks--Long-Term Forecast Returns

Ticker
BRGYY LUKOY HFC BP WNR

Name
BG GRP PLC-ADR LUKOIL HLDG-ADR HOLLYFRONTIER BP PLC WESTERN REFING

Mkt Price
23.98 61.05 35.2 47.27 19.16

Valuation(%)
-73.5 -10.08 -5.4 -13.2 -23.19

Last 12-M Retn(%)

2.79 -6.75 28.84 3.32 15.42

Top-Five Oils and Energy Stocks--Composite Score

Ticker
BRGYY DK TSO HFC WNR

Name
BG GRP PLC-ADR DELEK US HLDGS TESORO CORP HOLLYFRONTIER WESTERN REFING

Mkt Price
23.98 13.86 28.73 35.2 19.16

Valuation(%)
-73.5 -25.26 -20.18 -5.4 -23.19

Last 12-M Retn(%)

2.79 31 18.18 28.84 15.42

Top-Five Oils and Energy Stocks--Most Overvalued

Ticker
EGY HK FXEN MHR JKS

Name
VAALCO ENERGY RAM ENERGY RSRC FX ENERGY INC MAGNUM HUNTER JINKOSOLAR HLDG

Mkt Price
8.48 11.07 6.71 7.5 8.03

Valuation(%)
300 300 300 142.33 123.68

Last 12-M Retn(%)

9.99 119.64 -32.43 11.61 -70.84

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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 Exxon-Mobil (XOM,$XOM) Exxon Mobil Corporation's principal business is energy, involving exploration for, and production of, crude oil and natural gas, manufacturing of petroleum products and transportation and sale of crude oil, natural gas and petroleum products. Exxon Mobil is a major manufacturer and marketer of basic petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics and a wide variety of specialty products. Exxon Mobil is engaged in exploration for, and mining and sale of coal, copper and other minerals.

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

What's Hot-ValuEngine.com Valuation Model No Longer Sees Buyer's Market for Equities
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. 2011 was a very volatile year for the markets, and we essentially ended up right where we started in terms of the level for the S&P 500. But 2012 has begun with a bang and the markets have rallied strongly based on better sings of recovery in the US and yet another announced solution to the Euro zone debt crisis. Below, you can see that our Valuation Model no longer rates stocks as highly undervalued, and we would have to say that our valuation figures for the overall market are now smack dab in the middle of "normal" range--40%-60% over or under. That's a pretty big change in just 6 weeks.
MARKET VALUATION
Stocks Undervalued Stocks Overvalued Stocks Undervalued by 20% Stocks Overvalued by 20% sp500

12/30/11
73.03% 26.97% 39.95% 11.68% 1236.02

02/24/12
53.85% 46.15% 21.4% 17.76% 1363.46

We also see a big change in valuation on a sector basis. Since January 1st, we have gone from a mildly undervalued condition to double digit overvaluation for many sectors. This is once again a sign that stocks are no longer a bargain as they were back in the Summer. In many cases--Tech, FInance, Retail--the valuation model is indicating that it is time to books some profits from the recent run up.
SECTOR VALUATION
Aerospace Auto-Tires-Trucks Basic Materials

12/30/11
0.81% overvalued 15.42% undervalued 10.28% undervalued

02/24/12
11.78% overvalued 3.53% overvalued 8.38% overvalued

Business Services Computer and Technology Construction Consumer Discretionary Consumer Staples Finance Industrial Products Medical Multi-Sector Conglomerates Oils-Energy Retail-Wholesale Transportation Utilities sp500

4.18% undervalued 2.67% overvalued 9.53% undervalued 9.80% undervalued 5.73% overvalued 10.11% overvalued 9.22% overvalued 10.05% overvalued 2.08% undervalued 1.52% overvalued 3.55% overvalued 6.07% undervalued 9.33% overvalued 1263.02

6.56% overvalued 19.56% overvalued 1.65% undervalued 4.32% overvalued 11.55% overvalued 18.92% overvalued 12.69% overvalued 17.25% overvalued 17.54% overvalued 11.11% overvalued 18.48% overvalued 8.82% overvalued 12.51% overvalued 1263.02

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. Below, we present the chart which details 2011's Valuation Watches and Warnings--the red bars shown in the undervaluation chart below. The yellow line tracks the overall universe overvaluation figure when it is above 60% and a Valuation Watch is on. The red bars show days where we issued a Valuation Warning.

Here is a chart tracking undervaluation for the year as well as the various periods where we issued an overvaluation watch/warning in 2011. The model adjusts to the underlying earnings figures and the interest rate environment so, despite the similarity in the Index level back in April/May of 2011--when we had an overvaluation warning on several occasions, we see a radically different valuation picture. Now we see a market in which a bare majority of stocks are still calculated to be undervalued--but not as cheap as they were just a few months ago. The ValuEngine.com Valuation Model does not see an overvalued/overheated market just yet, but it is not seeing a bargain hunter's paradise out there either.

We had some market swings over the Summer, but since that last overvaluation watch in early May, the figures never really shifted out of what we would consider to be "normal" range--(40%-60%)-- until early August. Then, you see that as the market really swooned our model switched over to an extremely undervalued situation. We then began a fade back toward "normal" from October to the present day.

Finally, here is a longer-term chart tracking undervaluation back to March, 2007. Again, using the the overvalued warning as a sell signal seems more timely than using the undervaluation levels as a buy signal--overvaluation does not seem to persist as long as the more extreme undervaluation levels.

We will continue to watch and track our valuation metrics so that we may add to our dataset.
If you would prefer to put the power of ValuEngine to work for you at our new full-service money management firm, please contact us Info@VECapitalManagement.com (321) 215-4015 (610) 896-8823

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--10-Year--(1.988) My annual value is 2.502 with a daily pivot at 2.006, and annual, weekly, quarterly and monthly risky levels at 1.903, 1.874, 1.687 and 1.347. Commodities and Forex Comex Gold--($1781.2) Weekly, quarterly, semiannual, annual and weekly value levels are $1752.1, $1725.5, $1740.9, $1659.5, $1635.8, $1575.8, $1593.9 with a daily pivot at $1774.3, and my monthly risky level at $1816.4. Nymex Crude--($108.20) Weekly, quarterly, monthly and semiannual value levels are $100.50, $99.87, $85.62 and $79.83 with semiannual and annual pivots at $104.84 and $103.58, and daily and annual risky levels at $109.33 and $117.00. The Euro--(1.3366) Daily, semiannual, weekly, monthly, and quarterly value levels are 1.3246, 1.2980, 1.2982, 1.2945, and 1.2499 with annual and semiannual risky levels at 1.4239 and 1.4405. Major Indices Equity Technicals Dow Transports are well below their all time high set at 5627.85 on July 7, 2011. Transports fell below their 50-day simple moving average at 5150 but closed Thursday above it. The other market drag is small caps with the Russell 2000 below its all time high set at 868.57 on May 2, 2011. The Dow Industrial Average is attempting to reach weekly and daily risky levels at 13,027 and 13,035. The S&P 500 lags versus its May 2, 2011 high at 1370.58. The NASDAQ is above 2011 and 2007 highs as re-inflating tech bubble continues. Stocks are overvalued fundamentally and overbought technically with the Computer & Technology sector overvalued by 19.6% with a P/E ratio of 43.2 times.

Equity Fundamentals: 53.8% of all stocks are undervalued / 46.2% of all stocks are overvalued. Back on October 4th -93.5% of all stocks were undervalued. Fifteen of sixteen sectors are overvalued; ten are overvalued by double-digit percentages. (11.1% OV to 19.6% OV) Back in March 2009 the sectors were undervalued by 33% to 45%. PE Ratios range from 16.3 times for Multi-Sector Conglomerates to 43.2 times for Computer and Technology. Sectors have shifted to Overvalued from Undervalued Key Levels for the Major Equity Averages Dow --(12,985) Quarterly, annual, monthly and semiannual value levels are 12,478, 12,312, 11,557, 8,425 and 8,336 with my quarterly pivot at 12,796, and daily, weekly and annual risky levels at 13,035, 13,027 and 14,032. S&P 500--(1363.5) Quarterly, monthly and semiannual value levels are 1331.7, 1305.4, 1176.1, 841.7 and 829.9 with my annual pivot at 1363.2, and daily, weekly and annual risky levels at 1371.0, 1371.6 and 1562.9. The May 2, 2011 high is 1370.58. NASDAQ (2957) Quarterly, annual, monthly and semiannual value levels are 2849, 2777, 2698, 2512, 2012 and 1952 with daily, weekly and annual risky levels at 2982, 3005 and 3232. NASDAQ 100 (NDX) (2595) Quarterly, weekly, annual, monthly and semiannual value levels are 2471, 2422, 2412, 2300, 2280, 1851 and 1743 with daily, weekly and annual risky levels at 2616, 2635 and 2603. Dow Transports (5162) Monthly and semiannual value levels are 4522, 4407 and 3778 with a daily pivot at 5168, and weekly, quarterly, and annual risky levels at 5389, 5448, 5861 and 6111. The all time high was set at 5627.85 on July 11, 2011. Russell 2000 (829.19) Monthly and semiannual value levels are 662.90, 572.90 and 510.81 with quarterly pivots at 824.46 and 829.03, and daily, weekly, and annual risky levels at 834.69, 838.73, 836.15 and 969.09. The all time high was set at 868.57 on May 2, 2011. The SOX (424.68) Quarterly, monthly, annual and semiannual value levels are 423.32, 390.17, 323.52, 269.80, 277.90 and 194.47 with daily, weekly and annual risky levels at 432.74, 445.39 and 520.61. The 2011 high is 474.33 set on February 18, 2011.

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