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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
12119.85 2747.61 739.69 1278.29
Thursday Close
12461 2831.02 760.34 1314.99
3 day change
341.15 83.41 20.65 36.7
3 day change %
2.81% 3.04% 2.79% 2.87%
ytd
1.99% 8.67% 2.62% 4.56%
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
-0.34% -0.07% -0.19% -0.27% -0.51% 0.36% -0.62% -0.42% -0.13% 0.26% -0.31% 0.25% -0.05% -1.36% -0.40% 0.25%
MTD
-1.18% 0.38% 2.34% 0.05% -0.42% -1.05% -1.22% -0.30% 0.31% -0.21% 0.84% -0.63% -0.07% -0.83% -1.30% 1.19%
YTD
-2.66% 0.85% -5.28% 3.22% 3.66% 10.99% 6.21% 5.77% 10.42% -1.23% 6.60% 2.84% -11.20% 5.66% 3.08% -3.88%
Valuation
1.95% undervalued 18.05% undervalued 14.47% undervalued 5.81% undervalued 2.38% overvalued 10.86% undervalued 4.64% undervalued 7.55% overvalued 3.87% overvalued 0.64% overvalued 1.59% overvalued 2.43% undervalued 13.93% undervalued 2.88% overvalued 5.91% undervalued 7.34% overvalued
P/E Ratio
36.73 18.4 23.02 33.13 36.88 42.01 29.25 18.27 21.91 19.19 28 13.71 25.43 25.63 23.91 18.73
Sector TalkConstruction
Below, we present the latest data on leading Construction 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.
Name
UTD RENTALS INC CHICAGO BRIDGE OWENS CORNING EMPRESAS ICA KBR INC
Mkt Price
33.44 35.97 28.95 6.01 25.61
Valuation(%)
-2.63 -23.89 -16.42 -75 -35.47
Name
UTD RENTALS INC LENNAR CORP -A CHICAGO BRIDGE RYLAND GRP INC PATRICK INDS
Mkt Price
33.44 26.04 35.97 21.29 12.62
Valuation(%)
-2.63 6.42 -23.89 -26.96 N/A
Name
CHICAGO BRIDGE DYCOM INDS UTD RENTALS INC KBR INC PULTE GROUP ONC
Mkt Price
35.97 19.38 33.44 25.61 8.88
Valuation(%)
-23.89 -33.09 -2.63 -35.47 -31.63
Name
TUTOR PERINI CP NCI BLDG SYSTEM ORION MARINE GP INTERLINE BRAND SHERWIN WILLIAM
Mkt Price
11.72 9.54 6.75 24.99 130.07
Valuation(%)
300 300 34.91 17.55 15.4
Weekly Subscribers can download a FREE Detailed Valuation Report on Chesapeake Energy 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.
Currently on our website, you can find screening tools for four of ValuEngine's Benchmark Portfolio Strategies: the VE Aggressive Growth Portfolio Strategy--formerly known as the "VE Standard," the VE Diversified Growth Portfolio Strategy--formerly know as the "VE Forecast," the VE Income Portfolio Strategy, and the VE Star Portfolio Strategy. To View Current Holdings and Performance Tracking of our VE Benchmark Portfolio Strategies,CLICK HERE These strategies feature stocks selected according to specific criteria designed to meet the overall strategy goals for return and risk. All selections are based on calculations made by ValuEngine's proprietary stock valuation and forecast models as well as additional fundamental datamarket capitalization, e/p ratio, momentum, dividend scheduleswhere applicable, as well as other factors. For this week's training tip, we'll explain the various benchmark portfolio strategies and provide a link so you can apply them to your own investing. THE VE AGGRESSIVE GROWTH STRATEGY The VE Aggressive Growth Benchmark Portfolio Strategy is designed to provide maximum returns. It selects stocks for portfolios based on calculations on stock valuation supplied by ValuEngine's proprietary stock valuation model as well as other fundamental financial data. The VE Valuation Model calculates what a stock should trade at based on its fundamental economic data if the market were completely rational and efficient.Of course--despite the claims of many--the market is not rational nor is it necessarily efficient. If it were, there would never be a bubble or a panicdriven crash. Over time, this strategy is highly successful when run in a market neutral configuration, but it does possess a high degree of volatility. The VE Aggressive Growth Benchmark Portfolio Strategy is based on the proprietary VE Composite Score Ranking system. This ranking system is designed to assess the attractiveness of each of the more than 5000 stocks in our database. The VE Composite Score Ranking system combines the following three factors: stock valuation, price momentum, and earnings/price ratio. Each of these quantitative measurements are ranked on a scale of 1 to 100. The higher the ranking, the more positive the influence each measurement has on the overall attractiveness of the stock. The sum of the three rankings forms the VE Composite Score Ranking. Stocks with the highest scores are selected for the long side of the ValuEngine Aggressive Growth Portfolio. If two or more stocks have the same VE Composite Score Ranking, the VE Valuation Ranking is used as a tiebreaker. No diversity criteria are applied and thus this strategy is free to create a portfolio without sector limits in a
search for maximum total return. This strategy allows better overall gains, but does result in an increase in volatility as the portfolios may be significantly over or underweighted on a sector basis depending on valuation and other calculations at the time of portfolio selection. THE VE DIVERSIFIED GROWTH STRATEGY The VE Diversified Growth Strategy relies on the stock-return forecast calculations of the VE Forecast Model. The ValuEngine Forecast model analyzes stock prices from a different perspective. Unlike the Stock Valuation model--which merely states what a stocks price should be assuming a totally efficient market, the VE Forecast Model predicts what a stocks price will be at a specified future time period given current market conditions. For the VE Diversified Growth portfolios, stocks predicted to provide the highest returns for each sector make up the long picks. By selecting one stock from each sector for the smallest 16 stock portfolio, sector diversity is achieved. This results in lower overall performance when compared to the VE Aggressive Growth Benchmark Portfolio Strategy but provides reduced volatility. THE VE INCOME STRATEGY The VE Income Strategy is designed to provide investors with satisfactory returns, low volatility, low trading costs, and the relative security of large cap stock investing along with the performance boost provided by capturing monthly, quarterly, and annual dividends. For the VE Income portfolios, stocks with the highest dividend yields that will go exdividend for monthly, quarterly, or annual dividends during the next rebalance period are identified to form the preliminary stock basket. Stock selections are further refined by applying the VE Forecast Model one-year return calculations to identify stocks predicted to return more than 4% over the next twelve months. Stocks meeting these criteria with market prices over $5.00 and whose size ranking is greater than 54-@ $1 billion in January 2011are selected for the portfolios. Portfolio size is limited to 20 stocks and fluctuates as market conditions result in higher and lower numbers of stocks that meet the selection criteria. Occasionally over the course of the back test, size dipped below the standard 20 and hit a low of eight stocks in October 2007.
THE VE STAR STRATEGY The VE STAR Benchmark Portfolio Strategy also relies on the calculations of the VE Forecast Model. However, here we once again focus on maximum return and no diversity criteria are applied. When you screen for a portfolio using this strategy, the main criteria is for the stocks to have the highest forecast one-year return. There are no diversity criteria and the strategy is free to overweight or underweight sectors in a search for maximum return. All four Benchmark Portfolio Strategies include additional criteria such as market price, market cap, etc. In this manner, some of the more volatile small caps are removed from consideration as our research program has found that this provides major risk reduction without significant reward penalties. You can always check out the performance of our benchmark portfolio strategies on our website by going to the ValuEngine Portfolios page. HERE you can view the current and historic holdings of the portfolio and view performance data. You can run the strategies for yourself and get baskets of stocks selected with up-tothe-day market data by going to our VE Benchmark Portfolios screening page HERE. By running your own screens for the strategies, you can re-balance your portfolio according to your own needs. To Screen for Your Own Portfolio using our VE Benchmark Portfolio Strategies, CLICK HERE Custom feeds of our benchmark strategies in long only, market neutral, and other derivations as well as historical data and in-depth tracking information are available to ValuEngine customers for additional fees. Our research and development team is fast, agile, and experienced and can deploy the power of ValuEngine's proprietary models to help you develop a customized strategy and achieve your investment goals. In addition, we are currently testing and developing several additional strategies. To learn more, contact us at support@ValuEngine.com.
ValuEngine offers sophisticated stock valuation and forecast research as well as a variety of portfolio screening and creation tools.
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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--(1.644) Semiannual and monthly value levels are 1.903 and 1.909 with daily, quarterly, semiannual and weekly risky levels at 1.469, 1.407, 1.385 and 1.370. Commodities and Forex Comex Gold--($1592.1) My annual value level is $1388.4 with my annual pivot at $1575.8, a weekly pivot at $1612.1, and daily, semiannual and monthly risky levels at $1620.8, $1635.8, $1659.4 and $1695.4. My quarterly risky level is $1871.9. The 50-day / 200-day SMAs: $1620.4 / $1683.8. Nymex Crude--($84.12) Daily and semiannual value levels are $80.29 and $79.83 with a weekly pivot at $86.55 (tested on Thursday) and quarterly, annual and semiannual risky levels at $101.55, $103.58 and $104.84. The Euro--(1.2566) My daily value level is 1.2440 with weekly, monthly, semiannual and quarterly risky levels at 1.2646, 1.2815, 1.2980 and 1.3366. The June 2010 low is 1.1880. Major Indices Daily Dow: (12,461) My daily value level is 12,229 with weekly and annual pivots at 12,279 and 12,312, quarterly risky level at 12,794, and annual and monthly risky levels are 14,032 and 14,201. S&P 500 (1315.0) Daily and weekly value levels are 1291.7 and 1278.3 with quarterly, annual, monthly and annual risky levels at 1337.7, 1363.2, 1504.8 and 1562.9. NASDAQ (2831) Daily, weekly and annual value levels are 2791, 2716 and 2698 with quarterly, annual and monthly risky levels at 2911, 3232 and 3248.
NASDAQ 100 (NDX) (2535) Daily, weekly and annual value levels are 2509, 2414 and 2300 with annual, quarterly and monthly risky levels at 2603, 2608 and 2873. Dow Transports (5009) Weekly and daily value levels are 4903 and 4899 with a quarterly risky level at 5420, and the all time high set at 5627.85 on July 11, 2011. Russell 2000 (760.34) Daily and weekly value levels at 746.39 and 736.52 with quarterly and annual risky levels at 829.34 and 836.15, and the all time high set at 868.57 on May 2, 2011. The SOX (367.47) Daily and weekly value levels are 359.91 and 348.53 with quarterly and monthly risky levels are 416.01 and 449.21, and the 2011 high at 474.33 set on February 18, 2011. With Richard Suttmeier's Morning Briefing, you get daily analysis of US Treasury Click HERE to Sign Up Yields, Gold, Crude Oil, for Chief Market and Currency Exchange Strategist Richard Rates--Dollar, Yen, Suttmeier's Morning Pound, and Euro--as Briefing! well as key technical indicators for the major equity averages.