January 28, 2011

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VALUATION WATCH: Our models find that overvaluation is approaching

levels typically seen when a market correction is imminent. Overvalued
stocks now make up 64% of our universe and 30% of the universe is
calculated to be overvalued by 20% or more. ALL 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 Pain Therapeutics (PTIE,
$PTIE). ValuEngine has issued a STRONG BUY recommendation for Pain Therapeutics
on Jan. 28, 2011. Based on the information we have gathered and our resulting
research, we feel that Pain Therapeutics has the probability to OUTPERFORM average
market performance for the next year. The company exhibits ATTRACTIVE expected
EPS growth, momentum and market valuation.
Based on available data as of today, we believe that PTIE should be trading at
$7.444. This makes PTIE 14.20% 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 PTIE, we base this on actual earnings per share
(EPS) for the previous four quarters of -$0.11, forecasted EPS for the next four quarters
of $0.25, and correlations to the 30- year Treasury bond yield of 4.56%.
 When we recently screened for top-ranked stocks in both short and long-term
forecast projections that had a minimum share price of $3.00 and average daily
volume of 100k shares/day, PTIE finished third in our results. The long-term forecast
figures are very impressive and lead to the ticker's rating of STRONG BUY. The one-
year forecast figure ranks in the top 1% of our universe of more than 5500 stocks.
Pain Therapeutics is developing a new generation of opioid painkillers. Opioids
are drugs derived from the poppy plant. The company uses technology to
reformulate opioid drugs, such as morphine, into new painkillers with improved clinical
benefits. The company has four opioid painkillers in Phase II clinical trials. The
company believes its drugs offer enhanced pain relief, fewer adverse side effects
and reduced tolerance and addiction compared to existing opioid painkillers.
Yesterday, Pain Therapeutics, Inc. announced that the U.S. FDA has accepted
a New Drug Application resubmission for REMOXY. REMOXY is designed to provide
steady, around-the-clock pain relief, while resisting common methods of tampering
intended to result in the rapid release of oxycodone.

Weekly Subscribers can download a FREE Detailed Valuation Report on PTIE 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 11873.5 11989.8 116.3 0.98% 2.43%
NASDAQ 2693.03 2755.28 62.25 2.31% 1.54%
RUSSELL 2000 773.71 795.43 21.72 2.81% -0.67%
S&P 500 1283.29 1299.54 16.25 1.27% 1.95%

Summary of VE Stock Universe

Stocks Undervalued 35.62%
Stocks Overvalued 64.38%
Stocks Undervalued by 20% 15.43%
Stocks Overvalued by 20% 30.53%
SECTOR OVERVIEW
Sector Change MTD YTD Valuation Last 12- P/E
MReturn Ratio
Aerospace 0.19% 4.80% 4.80% 11.58% overvalued 37.90% 19.22
Auto-Tires-Trucks 1.69% 3.01% 3.01% 18.02% overvalued 42.91% 20.77
Basic Materials -1.08% -3.71% -3.71% 18.77% overvalued 52.64% 39.26
Business Services 0.23% 2.74% 2.74% 14.94% overvalued 22.34% 33.27
Computer and Technology 0.37% 10.09% 3.97% 11.99% overvalued 39.49% 37.52
Construction -0.32% 4.73% 4.73% 4.32% overvalued 17.76% 29.91
Consumer Discretionary 0.35% 0.54% 0.54% 6.50% overvalued 25.27% 31
Consumer Staples -0.34% 0.38% 0.38% 7.24% overvalued 20.88% 24.85
Finance 0.47% 1.65% 1.65% 9.10% overvalued 19.73% 28.28
Industrial Products 0.07% 1.48% 1.48% 13.97% overvalued 34.07% 32.78
Medical 0.10% 2.82% 2.82% 0.31% overvalued 20.10% 36.06
Multi-Sector Conglomerates 0.24% 4.79% 4.79% 17.97% overvalued 40.05% 35.08
Oils-Energy 0.15% 2.99% 2.99% 29.35% overvalued 39.60% 48.06
Retail-Wholesale 0.34% -0.66% -0.66% 8.19% overvalued 28.96% 26.73
Transportation 0.21% -0.15% -0.15% 14.65% overvalued 31.19% 28.52
Utilities -0.14% 0.79% 0.79% 8.64% overvalued 18.67% 20.69

Sector Talk--Transportation
Transportation has been in the news for a variety of reasons of late. Good news
for some airlines continues as the major carriers reap the rewards of the numerous
fees, hedging schemes, and capacity changes implemented in the wake of the big
jump in fuel costs from a few years ago. Recent ticket price increases seem to have
more staying power as even low-cost giant Southwest has fallen in line.
On the other hand, bad news has been the rule for maritime bulk shippers as
the Baltic Dry Bulk Index amply illustrates. This time around rising commodities costs
don't seem to help the shippers as they suffer from a big jump in capacity as
additional carriers --ordered near the end of the bubble back in 2006-2008--are now
completed.
Below, we present top-five lists for the Transportation 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. Investors
beware, while our models have been quite astute with airline stocks for months now,
the crazy action of the dry bulk shippers has given them fits.
Top-Five Transportation Stocks--Short-Term Forecast Returns
Last 12-M
Ticker Name Mkt Price Valuation(%)
Retn(%)
YRCW YRC WORLDWD INC 4.37 -75 -80.36
EXM EXCEL MARITIME 4.71 -49.54 -24.28
AMR AMR CORP 7.56 -45.08 -0.53
EGLE EAGLE BULK SHPG 4.11 -15.53 -21.86
DRYS DRYSHIPS INC 4.81 -41.43 -18.75

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

Last 12-M
Ticker Name Mkt Price Valuation(%)
Retn(%)
KSP K-SEA TRANSPORT 5.28 -65.58 -64.52
YRCW YRC WORLDWD INC 4.37 -75 -80.36
CHRW CH ROBINSON WWD 77.74 15.08 38.08
UPS UTD PARCEL SRVC 72.91 1.63 26.51
OSG OVERSEAS SHIPHO 32.45 -31.58 -26.3

Top-Five Transportation Stocks--Composite Score

Last 12-M
Ticker Name Mkt Price Valuation(%)
Retn(%)
UNP UNION PAC CORP 95.34 6.83 52.08
NSC NORFOLK SOUTHRN 62.31 -0.91 26.65
UPS UTD PARCEL SRVC 72.91 1.63 26.51
LUV SOUTHWEST AIR 12.49 -21.85 9.85
LCC US AIRWAYS GRP 11.05 -50.61 127.37

Top-Five Transportation Stocks--Most Overvalued

Last 12-M
Ticker Name Mkt Price Valuation(%)
Retn(%)
ACLI AMER COMML LINE 32.99 67.03 82.06
CPLP CAPITAL PRODUCT 9.81 65.05 22.47
ODFL OLD DOMINION FL 33.37 54.28 83.76
GBX GREENBRIER COS 24.43 51.75 187.75
NMM NAVIOS MARITIME 18.87 49.88 20.73
 Subscribers can check out the latest valuation, forecast, and ratings figures on
the Transportation Sector from our Models HERE.
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What's Hot--Suttmeier's AAII Presentation

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.

Last week, Richard appeared at the

Orlando, Florida chapter of the American
Association of Individual Investors (AAII) to discuss his market outlook for 2011, his
method of stock picking using ValuEngine and Technical Analysis, and the "Buy and
Trade" strategy upon which his popular ValuTrader Model Portfolio Newsletter is
based.
 Suttmeier spoke to a crowd of @80 local investors and
was very well-received. Richard eschewed the typical sales
pitch and focused on his market views as well as the nuts
and bolts of the strategy underlying his successful
ValuTrader Model Portfolio Newsletter.
We have created a special presentation section on our
website and posted Suttmeier's Power Point slides from the
AAII meeting. In the future, we will post similar presentations
of interest to subscribers.
You may now check out the slides if you wish by
clicking HERE.

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

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-- (3.385) Daily, weekly, annual and semiannual value
levels are 3.438, 3.758, 3.791 and 4.268 with annual, semiannual
and monthly risky levels are 2.690, 2.441, 2.322 and 2.150. The yield
on the US Treasury 10-Year note has formed a trading range
between 3.568 and 3.247 balanced by supply, fears of inflation
and QE2 buying by the Federal Reserve.
Commodities and Forex
Comex Gold-- ($1311.3) Semiannual and annual value levels are $1300.6 and $1187.2
with a daily pivot at $1319.2, quarterly and annual pivots at $1331.3 and $1356.5, and
weekly, monthly, quarterly and semiannual risky levels at $1390.9, $1439.0, $1441.7
and $1452.6. Comex gold declined as expected and now faces my semiannual
value level at $1300.6.
Nymex Crude-- ($85.42) My monthly value level is $75.74 with daily and semiannual
pivots at $84.80 and $87.52, and weekly, annual, semiannual and quarterly risky levels
at $95.34, $99.91, $101.92, $107.14 and $110.87.Nymex crude oil failed below its
semiannual pivot at $87.52 as the $92.00 a barrel barrier proved to be resistance.

The Euro-- (1.3725) Weekly, quarterly and monthly value levels are 1.3398, 1.3227 and
1.2805 with a daily risky level at 1.3828. Semiannual and annual risky levels are 1.4624,
1.4989, 1.6367 and 1.7312.The euro has become stronger than expected after holding
1.3225, but faces a daily risky level at 1.3828 today.

Major Indices

Stocks are overvalued fundamentally and overbought technically. Stocks

remain overvalued fundamentally according to ValuEngine with all 16 sectors
overvalued and only 35.6% of all stocks undervalued. This follows last week’s
ValuEngine Valuation Warning last week, which will renew if less than 35% of stocks
are undervalued.

All major averages are extremely overbought on there weekly charts and my
Proprietary Analytics show weekly risky levels at 12,162 Dow, 1333.9 S&P 500, 2805
NASDAQ, 5321 Dow Transports, and 828.86 Russell 2000.

The Dow

Daily: (11,990) Annual, quarterly, semiannual, monthly and semiannual value levels
are 11,491, 11,395, 10,959, 10,427 and 9,449 with daily, weekly and annual risky levels
at 12,053, 12,162 and 13,890. The Dow Industrial should find a top above 12,000 just as
14,000 was a barrier in October 2007. There is an 85% chance that the Dow will
decline to my annual pivot at 11,491 at some point in 2011.