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DJIA NASDAQ RUSSELL 2000 S&P 500
10771.86 2496.98 657.37 1136.91
11154 2480.76 662.8 1160.4
4 day change
382.14 -16.22 5.43 23.49
4 day change %
3.55% -0.65% 0.83% 2.07%
-4.77% -8.05% -16.25% -9.15%
Summary of VE Stock Universe
Stocks Undervalued Stocks Overvalued Stocks Undervalued by 20% Stocks Overvalued by 20% 89.34% 10.66% 64.56% 3.72%
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
0.46% 2.24% -0.34% 0.27% -0.01% 1.69% -0.16% 1.38% 2.18% 0.06% 0.68% 1.73% -0.42% 0.06% 1.47% 1.45%
-7.25% -11.84% -16.53% -6.61% -7.74% -9.82% -7.81% -5.98% -6.59% -11.17% -6.16% -8.63% -14.32% -5.03% -9.58% -4.98%
0.20% -35.84% -27.13% -12.44% -15.60% -30.34% -17.81% -19.00% -14.79% -21.62% -7.99% -19.68% -25.71% -7.31% -20.78% -6.47%
23.82% undervalued 31.86% undervalued 32.57% undervalued 25.71% undervalued 28.87% undervalued 33.19% undervalued 27.21% undervalued 20.97% undervalued 25.12% undervalued 29.79% undervalued 29.61% undervalued 23.41% undervalued 31.47% undervalued 21.76% undervalued 25.15% undervalued 10.41% undervalued
1.72% 0.27% -2.00% -3.13% -3.68% -17.46% -2.17% -1.75% -5.46% 1.23% 3.64% -1.92% 3.98% 9.22% -5.73% 3.37%
16.33 16.08 27.8 35.54 31.34 34.42 23.63 15.63 22.8 20.9 24.01 20.24 32.62 23.53 20.14 23.64
Sector Talk—Retail/Wholesale Stocks
Below, we present the latest data on leading ADRs 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 Retail/Wholesale Stocks--Short-Term Forecast Returns
PCLN NFLX GMCR LULU WFM
PRICELINE.COM NETFLIX INC GREEN MTN COFFE LULULEMON ATHLT WHOLE FOODS MKT
478.02 113.19 96.39 51.91 67.07
-34.31 -62.98 -6.5 -14.07 -15.72
Last 12-M Retn(%)
37.31 -33.66 210.33 129.79 80.44
Top-Five Retail/Wholesale Stocks--Long-Term Forecast Returns
SHLD PCLN GMCR TA EBAY
SEARS HLDG CP PRICELINE.COM GREEN MTN COFFE TRAVELCENTERS EBAY INC
57.37 478.02 96.39 3.67 30.67
52.52 -34.31 -6.5 -58.92 -29.75
Last 12-M Retn(%)
-20.73 37.31 210.33 7.94 22.73
Top-Five Retail/Wholesale Stocks--Composite Score
M AHONY PCLN EBAY CAH
MACYS INC AHOLD N V ADR PRICELINE.COM EBAY INC CARDINAL HEALTH
27.26 11.79 478.02 30.67 43.04
-30.28 -61.27 -34.31 -29.75 -23.2
Last 12-M Retn(%)
19.04 -10.75 37.31 22.73 31.74
Top-Five Retail/Wholesale Stocks--Most Overvalued
AMZN SHLD BIOS ARO LOOP
AMAZON.COM INC SEARS HLDG CP BIOSCRIP INC AEROPOSTALE INC LOOPNET INC
222.44 57.37 6.37 11.25 17.43
65.45 52.52 44.29 26.7 24.31
Last 12-M Retn(%)
39.91 -20.73 22.97 -51.8 51.83
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ValuEngine.com Market/Sector Overviews
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. 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. When overvaluation exceeds 65%, we issue a valuation warning. We began our last Valuation Watch on April 28th with the SP 500 at 1355 and the overvaluation figures almost hitting 62%. Significantly, our Chief Market Strategist Richard Suttmeier, using both the fundamentally-based Valuation Model calculations as well as his own read of the technicals, called for a 1000 point decline in the Dow during his May media appearances. VE Capital Management Portfolio Manager Brian Brogan also warned investors on equities in early June. Since then, the markets have shed the year's gains and were flirting with Bear Market correction territory--generally considered to be a decline of 20% Below, we show the changes in valuation since we issued our last Valuation Watch at the end of April.
Stocks Undervalued Stocks Overvalued Stocks Undervalued by 20% Stocks Overvalued by 20% sp500
38.25% 61.75% 16.36% 30.28% 1355.66
89.34% 10.66% 64.56% 3.72% 1160.4
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 sp500
8.67% overvalued 9.34% overvalued 10.35% overvalued 9.75% overvalued 9.95% overvalued 5.34% overvalued 6.96% overvalued 10.28% overvalued 7.64% overvalued 10.11% overvalued 5.14% overvalued 16.31% overvalued 20.39% overvalued 8.22% overvalued 13.49% overvalued 12.61% overvalued 1355.66
23.82% undervalued 31.86% undervalued 32.57% undervalued 25.71% undervalued 28.87% undervalued 33.19% undervalued 27.21% undervalued 20.97% undervalued 25.12% undervalued 29.79% undervalued 29.61% undervalued 23.41% undervalued 31.47% undervalued 21.76% undervalued 25.15% undervalued 10.41% undervalued 1260.34
At today's levels, we see a drop of 15.63% from the May 2nd highs. In this case, the correction predicted by our Chief Market Strategist, our Portfolio Manager, and our Valuation Model most certainly occurred and it remains to be seen if we will actually reach Bear Market territory--and it should be noted that Richard Suttmeier does consider this to be a new Bear Market. But what about our universe undervaluation figures? Can we use the metric in a similar fashion to call a bottom? Here the task is far more difficult. The calls are more robust to the upside since the overvalued condition seems to persist for only a short while. We have seen this with all of our overvaluation warnings and watches dating back to April/May 2010. However, once we start looking at the undervaluation numbers, the calls become more problematic since we have seen sustained undervaluation readings of 70%, 80%, and even 90% on occasion. Here is a chart tracking undervaluation since that last overvaluation watch in late April. We had some market swings, but the figures never really shifted out of what we would consider to be "normal" range until early August. Then you see that as the market really swooned our model switched over to an extremely undervalued situation.
Here is a longer-term overall undervaluation chart that starts from Spring 2007. In late 2008 and early 2009, we saw overall universe undervaluation readings in excess of 90% that lasted for months before the market began to rally in March 2009-- after the "satanic" low of 666 for the S&P 500. Note the sustained high overall undervaluation readings as the market laid in the bottom into March, 2009. Note too that the data switched form daily/weekly to monthly and realize that into that March low the undervaluation was pegged in excess of 85%.
This past performance makes it very difficult to use undervaluation to make precise call. Over time we have grown pretty confident in adjusting allocations and such when we see overvaluation figures at our watch levels and warning levels. But here we find no similar number upon which to make a bottom call based on undervaluation. In these cases, we need to emphasize the technicals. Remember that Richard Suttmeier called that March bottom and predicted a 50% rally on March 5, 2009! We will continue to watch and track our valuation metrics so that we may add to our dataset.
--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--(1.976) Semiannual, annual, monthly and quarterly value levels are 2.414, 2.690, 2.715 and 3.053 with daily, semiannual and weekly risky levels at 1.871, 1.672 and 1.369. My semiannual risky level at 1.672 was tested last Friday.
Commodities and Forex Comex Gold--($1620.7) Daily, semiannual and annual value levels are $1575.5, $1469.9 and $1,356.5 with quarterly, semiannual and monthly pivots at $1655.8, $1644.8 and $1702.3 and weekly risky level at $1915.0. The daily chart shows a doubletop with the 200-day simple moving average as important support at $1526.5 and the 50-day as resistance at $1744.7. Nymex Crude--($82.66) Daily and weekly value levels are $79.41 and $73.58 with the 200-week simple moving average at $83.65, my annual risky levels at $99.91 and $101.92, and quarterly, semiannual and monthly risky levels at $102.40, $103.92 and $104.23. The Euro--(1.3583) My daily value level is 1.3449 with weekly and quarterly pivots at 1.3646 and 1.3728, the 200-day simple moving average at 1.4050, and semiannual and monthly risky levels at 1.4752 and 1.4872.
Major Indices Equity Technicals We are at month end and quarter end with a stock market that’s extremely cheap fundamentally with neutral to negative weekly charts technically and with monthly charts that become negative at today’s closes below five-month modified moving averages at 11,954 Dow Industrials, 1273.5 SPX, 2683 NASDAQ, 2273 NDX, 5066 Dow Transports, 784.22 Russell 2000 and 400.23 SOX. The near-term strength straddled 50-day simple moving averages at 11,429 Dow Industrials, 1200.8 SPX, 2557 NASDAQ, 2227 NDX, 4618 Dow Transports, 711.82 Russell 2000 and 361.64 SOX with Thursday’s closes below all. With new weekly value levels and new monthly and quarterly risky levels out next week, there does not seem to be a catalyst to take stocks out of the extremely choppy trading ranges set off the August 9th lows.
Equity Fundamentals: Stocks are extremely undervalued •89.3% of all stocks are undervalued / 10.7% of all stocks are overvalued. In March 2009 we saw 91.1% of all stocks undervalued. On September 23rd we showed 91.8% undervalued. • All sixteen sectors are undervalued by double-digit percentages, fifteen by 21.0% to 33.2%. Back in March 2009 the sectors were undervalued by 33% to 45%.
Key Levels for the Major Equity Averages Dow --(11,154) Daily and weekly value levels are 10,731 and 10,101 with the 200-week and 120-month simple moving averages at 10,665 and 10,595, the 50-day at 11,429, and annual and monthly risky levels at 11,491 and 12,779. Semiannual value levels are 9,635 and 8,468. S&P 500--(1160.4) Daily, weekly and semiannual value levels are 1117.0, 1040.1, 981.3 and 855.7 with the 50-day at 1200.8 and my annual pivot at 1210.7. NASDAQ – (2481) Daily, annual, weekly, and semiannual value levels are 2406, 2335, 2221, 2199 and 2049 with the 50-day at 2557 and monthly risky level at 2827. NASDAQ 100 (NDX) – (2198) Daily, weekly, semiannual and annual value levels are 2147, 1999, 1951, 1861 and 1723 with the 50-day and 20-day SMAs at 2227 and 2292 and monthly risky level at 2431. Dow Transports – (4342) Daily, semiannual and weekly value levels are 4035, 3868 and 3686 with my semiannual pivot at 4335, the 50-day at 4618, and annual and monthly risky levels at 5179 and 5190. Russell 2000 – (662.80) Daily, weekly and semiannual value levels are 625.28, 565.64, 577.47 and 530.04 with the 50-day at 711.82, and annual and monthly risky levels at 784.16 and 825.19. The SOX – (350.82) Daily, weekly, annual and semiannual value levels at 341.04, 317.42, 270.98, 258.97 and 204.67 with the 50-day at 361.64, the 200day at 412.89, and monthly risky level at 418.07.
Note: For my technical momentum metrics--"MOJO"--I use what’s called “12x3x3 slow stochastic readings” from daily, weekly and monthly charts. The scale is zero to 10.0 where above 8.0 is overbought and below 2.0 is oversold.
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