October 7, 2011

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The ValuEngine Weekly is an Investor Education newsletter focused on the quantitative approach to investing and the tools available from ValuEngine.com. 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. If you are not yet a member of ValuEngine's stock analysis service, sign up now for a two-week free trial at www.valuengine.com!

MARKET OVERVIEW

Index
DJIA NASDAQ RUSSELL 2000 S&P 500

started week
10912.02 2401.19 639.73 1131.21

Thursday Close
11123.33 2506.82 673.8 1164.97

4 day change
211.31 105.63 34.07 33.76

4 day change %
1.94% 4.40% 5.33% 2.98%

ytd
-3.76% -6.26% -14.38% -7.64%

Summary of VE Stock Universe

Stocks Undervalued Stocks Overvalued Stocks Undervalued by 20% Stocks Overvalued by 20% 87.42% 12.58% 58.79% 3.71%

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
1.55% 3.32% 3.67% 1.72% 2.03% 2.71% 2.15% 1.83% 2.10% 2.36% 1.79% 1.70% 2.94% 1.99% 2.19% 1.44%

MTD
6.50% 13.49% 9.58% 7.73% 8.42% 9.05% 8.11% 4.82% 6.92% 9.59% 5.47% 6.02% 10.45% 7.30% 7.93% 4.40%

YTD
1.40% -33.49% -25.80% -12.28% -14.54% -29.12% -17.73% -19.23% -14.64% -21.50% -8.74% -20.13% -24.76% -6.86% -18.34% -6.65%

Valuation
22.40% undervalued 23.05% undervalued 25.19% undervalued 23.65% undervalued 25.00% undervalued 30.18% undervalued 24.85% undervalued 15.77% undervalued 23.18% undervalued 27.74% undervalued 27.40% undervalued 21.14% undervalued 28.93% undervalued 20.80% undervalued 22.97% undervalued 10.64% undervalued

Last 12MReturn
-0.07% 6.65% -2.78% -3.35% -3.58% -18.72% -4.25% -2.98% -7.44% -0.51% -0.87% -4.48% 18.95% 7.66% -7.17% 0.64%

P/E Ratio
20.99 30.02 32.19 28.13 33.56 35.51 29.02 16.97 18.06 17.24 28.48 19.96 32.97 27.43 23.25 20.3

Sector TalkMedical Stocks

Below, we present the latest data on leading Medical 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 Medical Stocks--Short-Term Forecast Returns

Ticker
VNDA DEPO ABMD GTIV AMRN

Name
VANDA PHARMACT DEPOMED INC ABIOMED INC GENTIVA HEALTH AMARIN CORP PLC

Mkt Price
5.53 5.56 11.59 3.72 9.2

Valuation(%)
-45.35 -6.85 -24.69 -75 -75

Last 12-M Retn(%)

-21.67 21.66 6.04 -82.8 268

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

Ticker
VNDA DEPO ABMD HTWR KERX

Name
VANDA PHARMACT DEPOMED INC ABIOMED INC HEARTWARE INTL KERYX BIOPHARMA

Mkt Price
5.53 5.56 11.59 69.04 3.16

Valuation(%)
-45.35 -6.85 -24.69 -18.68 -42.32

Last 12-M Retn(%)

-21.67 21.66 6.04 4.61 -32.33

Top-Five Medical Stocks--Composite Score

Ticker
AMRN PDLI AET BSX MDT

Name
AMARIN CORP PLC PDL BIOPHARMA AETNA INC-NEW BOSTON SCIENTIF MEDTRONIC

Mkt Price
9.2 5.63 35.5 5.64 32.74

Valuation(%)
-75 -53.81 -21.94 -45.69 -30.25

Last 12-M Retn(%)

268 13.74 17.9 -8.14 -0.91

Top-Five Medical Stocks--Most Overvalued

Ticker
VRUS REGN ELGX PCYC ARIA

Name
PHARMASSET INC REGENERON PHARM ENDOLOGIX INC PHARMACYCLICS ARIAD PHARMA

Mkt Price
80.37 64.73 10.82 12 9.35

Valuation(%)
300 132.41 124.6 113.72 86.26

Last 12-M Retn(%)

437.23 121.83 129.72 46.34 142.86

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What's Hot
ValuEngine Announces the Formation of VE Capital Management
We are pleased to announce the formation of VE Capital Management LLC (www.VECapitalManagement.com). VE Capital Management (VECM) melds the cutting-edge financial theory of ValuEngine.com's award-winning quantitative independent research with the best real-world Wall St. practices. VECM offers refined investment portfolios for investors of all risk-reward profiles.

Investors can now trade ValuEngine research and portfolio strategies directly via VECM

Every valuation, forecast, stock pick, and strategy provided by ValuEngine to VECM is derived from an extensive research program and has been carefully tested over 15 years to eliminate excess risk while maintaining the desired return profile. These fundamental-based quantitative valuation and forecast models rank more than 7000 US, Canadian, and other foreign equities EVERY DAY so that portfolios are always built on the best and latest calculations of our research department. Our portfolio managers include Brian D. Brogan, MS, CMT and Richard Suttmeier. Brogan specializes in behavioral finance, risk management and technical analysis. Suttmeier is the Chief Market Strategist for ValuEngine.com. He has worked in the US Capital Markets for more than thirty-five years. Full profiles can be found at www.VECapitalManagement.com Some of the featured portfolios that you as an investor can trade through VECM include: VE Income Portfolio: Stocks that pay a dividend. Only stocks paying a dividend within the next 30 days are included, so dividend returns are dramatically enhanced. Potential for stock appreciation is the final determinant, and is based on ValuEngine's forecast target prices. VE Aggressive Growth: An portfolio designed for maximum returns that uses ValuEngine's fair market valuation to find the 20 most attractive stocks based on valuation. VE Diversified Growth: A less volatile and more diverse portfolio which selects equities derived from ValuEngine's Forecast Model Strategy allocated equally across 16 sector groups. VE International: A portfolio made up of foreign stocks and ADRs (international companies) that trade on US markets forecast to provide maximum returns over the next twelve months. VE Market Neutral: A portfolio based on a hedge-fund strategy which includes both long and short exposure in order to reduce risk while maintaining sold returns during volatile markets. Global Tactical Equity: A portfolio featuring long and short global macro ETFs run according to behavioral finance criteria with high levels of scrutiny, diversity, and risk management.

Please contact us if you would like to put the power of ValuEngine to work for you at our new full-service money management firm
Info@VECapitalManagement.com (321) 215-4015 (610) 896-8823

--ValuEngine Capital Management Portfolio Manager Brian Brogan Discusses the Recent Market Volatility and the use of ETFs
Brian Brogan is a portfolio manager and COO for Value Engine Capital Management. He specializes in risk management and technical analysis. Brogan served on both the retail and institutional sides for several leading financial firms including Morgan Stanley Smith Barney, LPL Financial, Revenue Shares ETFs, H.G. Wellington & Co. Inc, PNC Bank, ING America, US Allianz, and Morgan Stanley Dean Witter. Brogan has over 12 years of experience on Wall Street working with some of the largest fund managers in North America. Brian specializes in Behavioral Finance.

Crazy Markets can Drive you Crazy!

The downturn which started in May of this year has led many investors to rethink their investment strategies. Some are running to defensive sectors like health care or staples, while some look to big dividend payers for downside protection. These are natural reactions to a correction or the onset of a Bear Market. What most investors dont take into account however, is how these sorts of "defensive" stocks move in relation to the S&P 500--otherwise known as their "correlation coefficient." When markets decline based on events in the news--such as the euro zone crisis, the first movers are not individual stocks being dumped, but rather the basket of stocks in the S&P 500 futures or ETFs which track those indices. Uber investment guru Warren Buffett has argued that we no longer have a "stock market" but a market of stocks. By this he argues that headlines and events now drive prices of whole markets up and down rather than the collective movements of individual stocks within any given index. To restate, it is the macro-risks illustrated by headline news which currently trump the technicals and fundaments of an individual company and its publicly traded stock.

This may sound like a "chicken or the egg" debate, but it is a critical issue for investing in today's fast and highly volatile markets. This is one of the reasons our Chief Market Strategist focuses on Buy and Trade" rather than the old stand by "Buy and Hold." One easy way to participate in an environment where individual stocks have lost some appeal and pose additional problems for individual investors are the very popular exchange traded funds (ETFs). But for all their popularity, ETFs are often difficult for investors to understand and we do see negative news about many of them. Certainly they are not all created equal and in some cases--such as the more highly specialized and esoteric ETFs or inverse index ETFs which will be held for a longer period of time--they may make little sense for investors. But, in markets which are driven by the headlines--which are themselves based on world news and events, ETFs provide an economical way for investors to participate in all sorts of asset classes which were simply unavailable via individual equities. Using the ETF products, investors can manage risk with some of the inverse index products, participate in commodities markets, add fixed-income components, play in the forex space, and much more. This market is not for everyone as it will test even the best professional, but using ETFs to diversify your portfolio can really help to smooth out the daily volatility and allows even the individual investor to participate in markets which were once the exclusive domain of hedge funds, investment banks, and higher net worth individuals.

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--(1.896) Monthly, semiannual, quarterly and annual value levels are 2.222, 2.414, 2.669 and 2.690 with a daily pivot at 1.955, and semiannual and weekly risky levels at 1.672 and 1.465. My semiannual risky level at 1.672 was tested on September 23rd.

Commodities and Forex Comex Gold-- ($1650.1) Semiannual and annual value levels are $1469.9 and $1,356.5 with daily and semiannual pivots at $1649.6 and $1644.8, and quarterly, monthly, and weekly risky levels at $1738.4, $1811.4 and $1866.8, and the September all time high at $1923.7. The 200-day simple moving average is $1532.9 with the 50-day at $1747.6 with the magnet at $1644.8. Nymex Crude--($82.57) Tuesdays year-to-date low is $74.95 with daily and weekly pivots at $79.82 and $80.30 with monthly, quarterly and annual risky levels at $98.51, $100.34, $99.91 and $101.92. The Euro--(1.3440) My quarterly value level is 1.2598 with daily and weekly pivots at 1.3349 and 1.3511, and monthly and semiannual risky levels at 1.4579, 1.4752 and 1.4872. The daily chart shows the 50-day simple moving average at 1.3998 trading below the 200-day at 1.4056 in whats called a Death Cross. Major Indices Equity Technicals While the daily charts are positive, today is Friday and the weekly charts remain negative on weekly closes below the five-week modified moving averages at 11,249 Dow Industrials, 1180.2 SPX, 2520 NASDAQ, 2204 NASDAQ 100 (NDX), 4502 Dow Transports, 692.46 Russell 2000, and 358.54 SOX. Equity Fundamentals: Stocks are extremely undervalued 87.4% of all stocks are undervalued / 12.6% of all stocks are overvalued. In March 2009 we saw 91.1% of all stocks undervalued All sixteen sectors are undervalued by double-digit percentages, fourteen by 20.8% to 30.2%. Back in March 2009 the sectors were undervalued by 33% to 45%.

Key Levels for the Major Equity Averages Dow --(11,123) The new YTD low is 10,404.49 with the 200-week and 120-month simple moving averages at 10,648 and 10,606, weekly and daily pivots at 10,713 and 10,938, my annual pivot at 11,491, the 50-day SMA at 11,260, and monthly and quarterly risky levels at 12,091 and 12,507. Semiannual value levels are 9,635 and 8,468. S&P 500--(1165.0) The October 4th YTD low is 1074.77 with semiannual value levels at 981.3 and 855.7, weekly and daily pivots at 1116.8 and 1129.4, the 50day SMA at 1180.6, and annual, monthly, quarterly and annual risky levels at 1210.7, 1259.8, 1303.7 and 1562.9. NASDAQ (2507) The October 4th YTD low is 2298.89 with my annual pivot at 2335, semiannual value levels at 2199 and 2049, weekly and daily pivots at 2404 and 2405, the 50-day SMA at 2516, and monthly, quarterly and annual risky levels at 2680, 2807 and 3243. NASDAQ 100 (NDX) (2218) The YTD low is 2034.92 with semiannual and annual value levels at 1951, 1861 and 1723, my weekly and daily pivots at 2140 and 2131, the 50-day and 200-day SMAs at 2201 and 2290, and monthly, quarterly and annual risky levels at 2312, 2440 and 2590. Dow Transports (4422) The October 4th YTD low is 3950.66 with my semiannual value level at 3868, my weekly, daily and semiannual pivots at 4058, 4266 and 4335, the 50-day SMA at 4506, and monthly, annual and quarterly risky levels at 4980, 5179 and 5359. Russell 2000 (673.78) The October 4th YTD low is 601.71 with semiannual value levels are 577.47 and 530.04, my weekly and daily pivots at 630.55 and 646.14, the 50-day SMA at 693.65, and monthly, annual and quarterly risky levels at 778.77, 784.16 and 802.96. The SOX (355.17) The October 4th YTD low is 322.24 with annual and semiannual value levels at 270.98, 258.97 and 204.67, my daily and weekly pivots at 338.00 and 346.91, the 50-day SMA at 355.60, and monthly and quarterly risky levels at 346.91, 363.01 and 417.63.
Note: For my technical momentum metrics--"MOJO"--I use whats 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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We provide a variety of means for accessing ValuEngine market analysis and other content. You can find us on some of the leading financial media websites as well as the more popular social media services. While our own website ValuEngine.com provides access to lots of analysis--and you can always sign up to receive email daily and weekly bulletins HERE, some users prefer to download PDF reports of content while others prefer to garner info while browsing the web. Our Chief Market Strategist Richard Suttmeier is a prolific market observer and you can find his content in a variety of places. His weekly column on Forbes provides insights into his "Buy and Trade" strategy while his daily market analysis can be followed and accessed at Scribd, Twitter, and Minyanville. Senior Editor Steve Hach re-posts PDFs and web-accessible copies of Daily and Weekly ValuEngine bulletins at Seeking Alpha and Scribd. In most cases, you can receive notification of VE content posting by Suttmeier and Hach by following the ValuEngine feed on twitter @ValuEngine. Links for this content are provided below, you may also find these links on our website HERE Intelligent Investing with Richard Suttmeier Articles by Richard Suttmeier | Articles by Steve Hach Newsletters, Articles and Other Research Pieces Articles by Richard Suttmeier | Articles by Steve Hach Get short, timely messages from ValuEngine Inc Daily Bulletin PDFs, Weekly Newsletter PDFs, and PDF Research Reports