December 7, 2012

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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

Week Open
13027.73 3029.21 825.87 1416.34

Thurs. Close
13074.04 2989.27 821.79 1413.94

Change
46.31 -39.94 -4.08 -2.4

% Change
0.36% -1.32% -0.49% -0.17%

YTD
7.35% 14.68% 11.29% 12.62%

Summary of VE Stock Universe

Stocks Undervalued Stocks Overvalued Stocks Undervalued by 20% Stocks Overvalued by 20% 60.83% 39.17% 22.93% 12.19%

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
0.14% -0.42% 0.20% -0.15% 0.49% -0.06% 0.20% 0.16% 0.03% 0.19% 0.01% -0.75% -0.56% 0.06% 0.11% -0.10%

MTD
-1.16% -0.13% -0.15% 0.54% 0.75% -1.79% 0.31% 0.06% 0.11% 0.06% -0.76% 0.92% -1.39% -0.24% -0.01% -0.60%

YTD
4.44% 14.03% 0.28% 9.77% 35.16% 62.83% 13.95% 15.16% 29.99% 8.52% 25.13% 11.57% -7.16% 20.42% 12.39% -5.91%

Valuation
6.39% overvalued 6.05% undervalued 6.14% undervalued 4.06% overvalued 4.21% overvalued 12.57% overvalued 0.78% overvalued 14.14% overvalued 8.22% overvalued 8.05% overvalued 2.75% overvalued 6.33% undervalued 5.32% undervalued 9.49% overvalued 10.15% overvalued 4.17% overvalued

Last 12MReturn
3.54% 6.22% -21.56% 6.05% 1.17% 30.05% 6.60% 9.32% 14.71% 3.49% 9.45% 15.59% -13.17% 16.28% 0.92% 1.97%

P/E Ratio
14.57 13.2 22.61 23.96 33.97 46.85 25.06 19.1 19.32 19.96 36.65 13.03 28.92 24.93 18.85 18.05

Sector TalkRetail
Below, we present the latest data on leading Retail 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.

Top-Five Retail Sector Stocks--Short-Term Forecast Returns

Ticker
SHLD ZLC MFRM VRA KSS

Name
SEARS HLDG CP ZALE CORP NEW MATTRESS FIRM VERA BRADLEY KOHLS CORP

Mkt Price
40.25 4.6 23.04 23.14 44.03

Valuation(%)
-25.25 -65.52 -28.76 -22.79 -17.59

Last 12-M Retn(%)

-32.91 20.42 3.83 -37.73 -11.46

Top-Five Retail Sector Stocks--Long-Term Forecast Returns

Ticker
GPS LL BBY RNDY HD

Name
GAP INC LUMBER LIQUIDAT BEST BUY ROUNDYS INC HOME DEPOT

Mkt Price
31.96 51.8 12.36 4.84 64.34

Valuation(%)
-1.05 -1.96 -47.3 -13.59 13.62

Last 12-M Retn(%)

72.66 201.69 -54.64 N/A 63.05

Top-Five Retail Sector Stocks--Composite Score

Ticker
GME M ASNA DRI GPS

Name
GAMESTOP CORP MACYS INC ASCENA RETAIL DARDEN RESTRNT GAP INC

Mkt Price
26.64 38.92 18.93 47.04 31.96

Valuation(%)
-10.86 -7.82 -10.99 -13.5 -1.05

Last 12-M Retn(%)

18.45 20.35 33.41 16.7 72.66

Top-Five Retail Sector Stocks--Most Overvalued

Ticker
TUES NFLX BIOS RT OSTK

Name
TUESDAY MORNING NETFLIX INC BIOSCRIP INC RUBY TUESDAY OVERSTOCK.COM

Mkt Price
6 86.17 10.85 7.76 14.39

Valuation(%)
291.6 213.41 88.54 82.09 62.01

Last 12-M Retn(%)

85.76 26.46 84.84 8.99 84.25

Find out what Wall Street Investment and Media Professionals already know, ValuEngine offers sophisticated stock valuation and forecast research as well as a variety of portfolio screening and creation tools. If you are reading this you should sign up for ValuEngine's award-winning To Sign Up for a stock valuation and forecast FREE TRIAL, service at the low price of Please Click $19.95/month! HERE NO OBLIGATION, 30 DAY FREE TRIAL!

Free Download for Readers

NOTE: There was a problem with the free report download link a few weeks ago. It has been corrected. We apologize for any inconvenience for readers. As a bonus to our Free Weekly Newsletter subscribers, we are offering a FREE DOWNLOAD of one of our Detailed Stock Valuation Reports--this report is normally $25.00 This week's free download is our report on Amazon.com (AMZN). Amazon.com, Inc. seeks to be the world's most customer-centric company, where customers can find and discover anything they may want to buy online. The company lists unique items in categories such as books, music, DVDs, videos, consumer electronics, toys, camera and photo items, software, computer and video games, tools and hardware, lawn and patio items, kitchen products, and wireless products. Free Weekly Newsletter Subscribers can download a FREE Detailed Valuation Report on AMZN 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

What's Hot--Valuation Report

It's time for our monthly look at our overall market valuation figures. The ValuEngine Valuation Model tracks more than 8000 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. We use this metric to get an overall snapshot of the market and to discern if stocks are a bargain or overpriced. In the past, the valuation figures have correlated fairly well to market tops and have signaled impending pull backs. Whenever we see overvaluation levels in excess of @ 60% for the overall universe, we issue a valuation watch. We do not have a similar metric for the undervaluation levels, but we generally find that when stocks are calculated to be more than 75% undervalued overall it is time to do some bargain hunting. Subscribers Get FULL ACCESS to our Market and Sector Overviews

In the YTD chart below, we see that we had a slight edge up into bargain territory during early November--the post-election "trader tantrum"?--but now we are kind of stalled out just on the edge of "normal" range. We have 61% of stocks calculated to be undervalued and 39% overvalued. We have been pegged here for much of the past month.

Our next major event is of course the so-called "fiscal cliff" fiasco now underway in Washington, DC. Republicans seem intent on ignoring the recent election results and promoting the tax plan of losing candidate Mitt Romney. Democrats want a tax hike on upper income earners even though this additional revenue alone will not be enough to close the budget gap. Pundits seem to favor the decimation of the popular Social Security program as a means of proving gravitas--even though Social Security is not the real driver of the deficit and can be made far more solvent via the application of minor "tweaks." Lost in all of this talk is the fact that a "grand bargain" for the sake of pleasing the pundit class really means little in the long term. It can be changed at any time at the whim of any future Congress. Perhaps the most interesting commentary comes from 2004 Presidential candidate Howard Dean, who advocates doing nothing and allowing the sequestration penalty to occur--"go over the cliff." Dean, who spent some time on Wall Street early in his life, argues that while this would likely cause a recession and inflict short-term pain, it has the most beneficial impact for the long-term health of the US economy. Not the most expected counsel from a politician considered to be "far left" by many!

Again, uncertainty rules the day despite the election results. Our confidence that a deal can be reached before the end of the year is fading. Sometimes the easiest thing is to do nothing. What effect this has on equities is difficult to discern. Despite the negative atmosphere since the election, our long picks have held up well. For reference, here is a longer-term chart which tracks the metrics back to March, 2010. Note that undervaluation levels peaked in excess of 90% last Summer--"Sell in May and Go Away"--and we never saw that sort of very high undervaluation level after our pullback in late Spring of this year. In this chart, we do see that any sustained undervaluation of 70% or higher is a decent buy signal.

And here is our even longer time frame chart which tracks things back to 2007 and encompasses the financial crisis.

We will continue to watch and track our valuation metrics so that we may add to our data set.

Suttmeier Says
--Commentary and Analysis from Chief Market Strategist Richard Suttmeier
If you have any comments or questions, send them to [email protected] Treasury Yields 10-Year--(1.579) Semiannual, quarterly and annual value levels are 1.853, 2.109 and 2.502 with my weekly pivot at 1.612, and daily, monthly, semiannual and monthly risky levels at 1.551, 1.452, 1.389 and 1.060. The 50-day and 200-day simple moving averages are 1.677% and 1.755%.

Commodities and Forex Comex Gold ($1700.3) Daily, monthly, weekly, semiannual and annual value levels are $1676. $1679.1, $1659.3, $1643.3 and $1575.8 with my semiannual pivot at $1702.5, and quarterly risky levels at $1844.9 and $1881.4. Set a 2012 high at $1798.1 on October 5. The 50-day and 200-day simple moving averages are $1733.7 and $1664.2. Nymex Crude Oil ($87.84) Monthly and semiannual value levels are $78.18 and $76.71 with daily and weekly pivots at $88.12 and $86.01, and annual and quarterly risky levels at $103.58 and $107.63. The 50-day and 200-day simple moving averages are $88.34 and $93.46. The Euro (1.3069) Weekly and monthly value levels are 1.2789 and 1.2203 with semiannual, daily and quarterly pivots at 1.2917, 1.3076 and 1.3048, and annual risky level at 1.4239. The 50-day and 200-day simple moving averages are 1.2914 and 1.2786.

Major Indices Daily Dow: (13,074) Monthly, weekly, annual and semiannual value levels are 12,826, 12,465, 12,312 and 10,738 with a daily pivot at 13,035, and annual and quarterly risky levels at 14,032 and 14,192. The QE3 high is 13,661.87 on October 5 with the October 2007 high at 14,198.10. The 50-day and 200-day simple moving averages are 13,152 and 12,997. S&P 500 (1413.90) Monthly, weekly, annual and semiannual value levels are 1378.6, 1354.5, 1363.2, and 1059.7 with a daily pivot at 1414.8, and quarterly and annual risky levels at 1513.3 and 1562.9. The QE3 high is 1474.51 on September 14 with the October 2007 high at 1576.09. The 50-day and 200-day simple moving averages are 1417.6 and 1385.8. NASDAQ (2989) Monthly, weekly, annual and semiannual value levels are 2893, 2812, 2698 and 2527 with daily, annual and semiannual value levels at 3008, 3232 and 3295. The QE3 high is 3196.93 on September 21 is well above the November 2007 high at 2861.51. The 50-day and 200-day SMAs are 3009 and 2988.

NASDAQ 100 (NDX) (2656) Annual, monthly, annual and semiannual value levels are 2603, 2596, 2485, 2300 and 2239, with daily and quarterly risky levels at 2672 and 2950. The QE3 high is 2878.38 on September 21 is well above the November 2007 high at 2239.23. The 50-day and 200-day SMAs are 2685 and 2671. Dow Transports (5116) Weekly, monthly, semiannual value levels are 5062, 4930, 4449 and 4129 with daily, quarterly and annual risky levels at 5125, 5541 and 5861. The QE3 high is 5231.15 on September 14 with the all time high at 5627.85 set on July 7, 2011. The 50-day and 200-day simple moving averages are 5041 and 5110. Russell 2000 (821.79) Monthly, weekly and semiannual value levels are 786.64, 778.06 and 686.25 with daily and annual risky levels at 829.53 and 836.15. The QE3 high is 868.50 on September 14 with the all time high at 868.57 set on May 2, 2011. The 50-day and 200-day simple moving averages are 818.09 and 806.05. The SOX (378.63) Weekly and monthly and semiannual value levels are 353.33, 326.94 and 326.30 with daily and quarterly risky levels at 378.73 and 439.97. The QE3 high is 410.82 on September 14 with the July 2007 high at 549.39. The 50-day and 200-day simple moving averages are 372.20 and 390.38.

Stock of the Day One of the more popular features of Richard Suttmeier's Morning Briefing for investors is his stock of the day. In every issue, Suttmeier highlights one stock and provides VE data as well as his own proprietary technical data. Here is today's stock of the day from Richard Suttmeier's Morning Briefing Newsletter. Big Lots (BIG) ($29.89) has a Buy rating according to ValuEngine with fair value at $36.05, which makes the stock 16.6% undervalued. The ValuEngine one-year price target is $31.95. ValuEngine Profile BIG LOTS/Consolidated Stores Corp. is one of the leading value retailers specializing in closeout merchandise and toys. The company operates stores in the U.S., Puerto Rico and Guam and conducted online sales of children's products. Retail operations are conducted primarily under the following names: Odd Lots, Big Lots, Big Lots Furniture, Mac Frugal's Bargains Close-outs, and Pic N Save and K B Toys, K B Toy Works, and K B Toy Outlet and KBkids.com.

Analysis The daily chart for BIG shows rising momentum with the stock above its 21day and 50-day simple moving averages at $28.43 and $29.30, and below its 200-day simple moving average at $36.62. My weekly value level is $26.91 with a semiannual pivot at $30.88 and quarterly risky level at $38.44.

Richard Suttmeier's Morning Briefing, you get daily analysis of US Treasury Yields, Gold, Crude Oil, and Currency Exchange Rates--Dollar, Yen, Pound, and Euro-as well as key technical indicators.

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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