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August 13, 2013

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Click HERE to Download a FREE Sample of the ValuEngine View Newsletter VALUATION WATCH: Our models find that overvaluation is at levels typically seen when market pullbacks occur. Overvalued stocks assigned a valuation now make up 76% of our universe and 43% of the stocks assigned a valuation are calculated to be overvalued by 20% or more. 15 of 16 sectors are calculated to be overvalued--14 of them by double digits.

Turbulence Ahead
--AMR/US Air Merger Challenged by US Justice Department
The Justice Department and a number of individual state attorneys general announced today that they are filing a lawsuit to stop the merger of airline giants AMR Corp (AAMRQ) and US Airways (LCC). The merger, if completed, would result in the largest US airline. The DOJ has objected to the merger on the basis that it would reduce competition and lead to increased air fares and a lower level of service across the Unites States. AMR Corp has been a high-flying stock selection for our Forecast Model for many months now. Subscribers to our VE View newsletter had been riding the stock's ascent for the past 8 months or so and the airline had returned more than 100%. When originally selected by our Forecast Model, the stock was trading at around $2.80/share. At recent highs in May, the stock was trading for @6.85/share. When the news was announced about the DOJ suit, the stock went into free fall and is currently trading around $3.15/share.

Of course, this is yet another good example of the need for stop-losses for every position, especially when you have had such a strong run up. It's also a reminder that the outside world can intervene within one's portfolio when one least expects it. Our model still rates AAMRQ a STRONG BUY-- because of the run up and the underlying fundamentals--and recent news from AAMRQ had been positive with the airline reporting all-time record revenue for the month of July only yesterday. However, it will take 24-48 hours for qualitative analysts to adjust their estimates for earnings and for our models to fully digest this big price swing. Clearly, this was a momentum play for the Forecast Model, and now that the momentum has been reversed, the models will have to recalculate. Below is today's data on AAMRQ:

ValuEngine Forecast
Target Price* Expected Return 1.74% 4.31% 3.77% 20.82% -14.13% -40.60%

1-Month 3-Month 6-Month 1-Year 2-Year 3-Year

5.91 6.06 6.03 7.02 4.99 3.45

Valuation 1-M Forecast Return 12-M Return Sharpe Ratio 5-Y Avg Annual Return Volatility Expected EPS Growth Market Cap (billions) Trailing P/E Ratio Forward P/E Ratio PEG Ratio Price/Sales Market/Book Beta Alpha

18.11% undervalued 1.74% 1062.00% -0.06 -8.41% 129.84% 126.50% 1.95 4.97 2.19 0.04 0.08 n/a 1.88 2.08

Valuation Rank 1-M Forecast Return Rank Momentum Rank Sharpe Ratio Rank 5-Y Avg Annual Rtn Rank Volatility Rank EPS Growth Rank Size Rank Trailing P/E Rank Forward P/E Ratio Rank PEG Ratio Rank Price/Sales Rank Market/Book Rank Beta Rank Alpha Rank

87 100 100 50 41 12 89 77 99 100 86 97 n/a 19 100

New Suttmeier Appearance Scheduled

New York Chapter Meeting of the Market Technicians Association August 14th featuring Richard Suttmeier and Stephen Suttmeier, CFA, CMT
Mixing Fundamental Data & Technicals in Market-Timing Richard & Stephen Suttmeier will be giving a joint presentation to MTA members and guests Wednesday, August 14, 2001 at 5:00 PM The New York Society of Security Analysts (NYSSA) 1540 Broadway, #1010 New York, NY.

The entrance is on West 45th Street between Broadway and 6 th Ave. Presentation at 5:30 PM. Richard Suttmeier, Chief Market Strategist at & Contributor to Richard Suttmeier has been a professional in the US Capital Markets since 1972 transferring his engineering skills to the trading and investment world. He earned a Bachelor of Industrial Engineering degree from Georgia Institute of Technology in 1966, and a Master of Science, Operations Research, Systems Analysis degree from Brooklyn Polytechnic University in 1970. Over the years Richard appeared many times in the financial media, on networks such as CNBC, CNN, CNNfn, New York 1, Bloomberg TV and radio, Fox Business, Business News Network in Canada, Wall Street Week with Fortune, Yahoo Finance Breakout, and the Bill Mazer Radio Show. In 2002, he anchored his own show on Yahoo Finance Vision called, "Traders' Club with Richard Suttmeier." Richard has been frequently quoted in USA Today, The NY Times, Wall Street Journal, Reuters, and The Dow Jones Newswires. Richard has made numerous speaking appearances in recent years to groups such as the Market Technicians Associations, the American Association of Individual Investors, Wells Fargo Advisors, the Executive Forum at the National Arts Club, and the Investors Roundtable of Wilmington NC. Stephen Suttmeier, CFA, CMT Stephen W. Suttmeier, CFA, CMT, is the Chief Equity Technical Strategist at BofA Merrill Lynch Global Research. Stephen has 19 years of experience in financial services. Prior to joining the firm in March 2007, Stephen was a small-cap equity research analyst at Capital Growth Financial and Joseph Gunnar & Co. Before that, he was senior technical analyst at Informa Global Markets, where he covered the fixed income, foreign exchange and commodity markets. Stephen holds the Chartered Financial Analyst (CFA) and Chartered Market Technician (CMT) designations and is a member of the American Association of Professional Technical Analysts (AAPTA), CFA Institute (CFAI), and the Market Technicians Association (MTA). He is Co-Chair for the New York Region MTA Chapter and the current Chairman for the CMT Board of Governors (BoG). The CMT BoG is responsible for the execution of the vision and strategic initiatives of the CMT Program. Stephen is also a grader for the CMT level III exam and was a CMT test question writer and subject matter expert (SME) from 2007-2012. Stephen earned his MBA from Fordham University's Graduate School of Business with a dual concentration in finance and accounting. He completed his undergraduate education at Fairfield University, where he received a bachelor degree with a double major in biology and English. He holds the Series 4, 7, 24, 63 and 87 licenses from the NASD.

Find Out More and Register HERE

Market Overview
Summary of VE Stock Universe
Stocks Undervalued Stocks Overvalued Stocks Undervalued by 20% Stocks Overvalued by 20% 23.69% 76.31% 10.02% 43.21%

Sector Overview
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

-0.13% 1.45% 1.92% 0.02% 0.38% 0.46% 0.28% -0.10% 0.08% 0.44% -0.31% 0.32% -0.33% 0.17% 0.13% 0.38%

1.82% 4.14% 3.36% 0.59% 1.53% 1.13% 1.59% 0.45% 0.27% 2.04% 2.19% 1.36% -1.06% -0.19% -0.29% 2.19%

28.08% 42.27% 3.98% 74.43% 29.53% 31.49% 31.40% 17.92% 25.22% 34.71% 197.61% 6.39% 25.16% 34.71% 22.07% 15.30%

19.95% overvalued 28.11% overvalued 7.00% undervalued 18.42% overvalued 21.30% overvalued 15.02% overvalued 23.53% overvalued 18.26% overvalued 18.94% overvalued 18.92% overvalued 19.30% overvalued 25.16% overvalued 4.51% overvalued 23.04% overvalued 19.02% overvalued 10.11% overvalued

Last 12MReturn
33.56% 46.55% -23.91% 26.27% 24.55% 34.83% 29.84% 24.07% 17.27% 28.99% 24.81% 14.86% 3.94% 37.83% 23.03% 11.27%

P/E Ratio
18.68 20.71 19.1 23.57 29.79 24.67 24.45 22.17 17.81 21.15 27.28 17.88 27.2 23.57 19.4 19.72