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January 21, 2010

MARKET OVERVIEW
Summary of VE Stock Universe
Stocks Undervalued 50.47%
Stocks Overvalued 49.53%
Stocks Undervalued by 20% 25.13%
Stocks Overvalued by 20% 24.13%

SECTOR OVERVIEW

Last 12- P/E

Sector Change MTD YTD Valuation
MReturn Ratio
Basic Industries -2.21% 1.49% 1.49% 16.38% overvalued 99.01% 26.88
Capital Goods -1.30% 3.24% 3.24% 6.66% overvalued 55.13% 23.47
Consumer Durables -1.34% 1.62% 1.62% 15.74% overvalued 81.36% 24.38
Consumer Non-Durables -1.30% 0.49% 0.49% 3.33% overvalued 72.12% 20.18
Consumer Services -1.03% 2.08% 2.08% 2.40% overvalued 76.90% 23.61
Energy -1.94% 2.52% 2.52% 15.09% overvalued 78.20% 21.2
Finance -0.86% 1.98% 1.98% 0.54% overvalued 36.78% 18.64
Health Care -1.18% 1.82% 1.82% 4.94% undervalued 61.56% 20.95
Public Utilities -1.21% -0.92% -0.92% 1.94% overvalued 44.83% 17.1
Technology -0.91% 2.24% 2.24% 2.43% undervalued 81.61% 26.29
Transportation -1.00% 1.55% 1.55% 2.58% overvalued 50.19% 22.08
Suttmeier Says
--Commentary and Analysis from Chief Market Strategist Richard Suttmeier
If you have any comments or questions, send them to Rsuttmeier@Gmail.com

Treasuries
The yield on the 10-Year is below my semiannual pivot at 3.675,
which signals risk aversion.

The daily chart for the 10-Year yield shows potential to the 50-day and
200-day simple moving averages at 3.558 and 3.443. This yield began
the year testing monthly support at 3.868.

Yields face another supply test next week with auctions of $44 billion in 2-Year notes next
Tuesday, $42 billion in 5-Year notes on Wednesday and $32 billion 7-Year notes on Thursday.
Of interest is that the next FOMC meeting ends at 2:15 PM on Wednesday, which could
provide a catalyst for volatility in US Treasury yields.

Commodities and Forex

Gold and Crude Oil decline as the Dollar Strengthens, and the Euro Weakens.

Gold ended Wednesday below my annual pivot at $1115.2 with my semiannual pivot now
resistance at $1139.7. You know I believe that the Gold Bubble has popped, but we need a
weekly close below my quarterly support at $1084.9 to signal risk to annual support at
$938.7.

Crude oil has tested and held my annual support at $77.05 and a weekly close below
indicates risk to quarterly support at $67.22. This would be a sign of a weaker than expected
global economy.

The dollar index has rallied into my zone of weekly and quarterly resistances at $78.59 and
$78.96. The dollar is testing its 200-day simple moving average for the first time since May 8,
2009.

More important is that the euro broke below its 200-day simple moving average 1.43 for the
first time since May 7, 2009. The downside is to the 200-week simple moving average at
1.3848.
The DOW

The Ascending Wedge Support is Broken for the Dow, giving Round 12 to the Bear.

The Dow traded below 10,570 on Wednesday, which breaks the uptrend that goes back to
the March 2009 low. The Bear thus wins the twelfth round of the Bull versus Bear Title Bout,
making the score card 9 to 3 in favor of the Bull. A close today above my weekly pivot at
10,634 gives round thirteen to the Bull. A close on Friday below my annual support at 10,375
gives the Bear the knockout victory.

The Next Two Days are the Key to the First Quarter!

The VE Stock of the Day--Google Inc (GOOG)

Google Inc. provides advertising and global internet search solutions, as well as intranet
solutions via an enterprise search appliance. GOOG is rated a BUY according to ValuEngine
with fair value at $583.62, which makes the stock 0.6% undervalued. The company is
expected to earn $6.43 in their report after the close today.

For Similar Data on more than 4000 Tickers, Go to VE Stock Analysis HERE
 Valuation & Rankings GOOG
Valuation 0.80% undervalued Valuation Rank 51
1-M Forecast Return -1.02% 1-M Forecast Return Rank 58
12-M Return 105.27% Momentum Rank 79
Sharpe Ratio 0.57 Sharpe Ratio Rank 97
5-Y Avg Annual Return 21.58% 5-Y Avg Annual Rtn Rank 95
Volatility 37.94% Volatility Rank 74
Expected EPS Growth 16.76% EPS Growth Rank 41
Market Cap (billions) 141.04 Size Rank 100
Trailing P/E Ratio 25.39 Trailing P/E Rank 54
Forward P/E Ratio 21.75 Forward P/E Ratio Rank 27
PEG Ratio 1.51 PEG Ratio Rank 28
Price/Sales 6.22 Price/Sales Rank 19
Market/Book n/a Market/Book Rank n/a
Beta 1.12 Beta Rank 47
Alpha 0.59 Alpha Rank 80

The daily chart for Google shows declining MOJO, with the stock below its 21-day and 50-
day simple moving averages at $603.95 and 590.68. My quarterly value level lags at $360.39
with a semiannual pivot at $605.05 and monthly risky level at $625.91.

Courtesy of Google Finance

The ValuEngine Quarterly FDIC Report UPDATED

Our Chief Market Strategist Richard Suttmeier is an expert on the banking system, and he
has been closely following the banking and credit crisis for several years now. In fact, he
predicted the current difficulties YEARS before they began. Every quarter, he takes the
FDIC's own Quarterly Banking profile, combines it with VE's powerful quant tools, adds
additional proprietary data from the FDIC on loan exposures, and collates the info into an
exhaustive report on the state of the US banking system.

We have updated the FDIC Report to include the latest VE datapoints on all problem banks
as well as Suttmeier's latest predictions for the US banking system and economy.

There are currently 759 publicly traded FDIC insured financial institutions
overexposed to CD Loans or Nonfarm Non-Residential Real Estate loans as per the
FDIC's own guidelines.

As of January 8, 2010, there were 221 banks overexposed to C&D and/or CRE loans in the
ValuEngine database with full data coverage. Of these overexposed banks, 82 were rated “1-
Engine” Strong Sells, 73 were rated “2-Engine” Sells—all of which are predicted to under
perform the markets as a whole, 63 were rated “3-Engine” Holds—which are predicted to
roughly match the overall market, 3 were rated a “4-Engine” Buy, and none held our highest
rating of “5-Engine” Strong Buy—with the 4 and 5-Engine stocks predicted to out perform the
overall market.

This means that there are currently 155 banks rated Sell or Strong Sell that are also
overexposed to C&D and/or CRE loans.

There are 198 overexposed institutions with only partial ValuEngine coverage and thus
those banks have no rating--these are included in the problem bank list.
 There are 341 additional institutions carrying C&D and/or CRE loans in excess of the
FDIC guidelines that do not appear in the ValuEngine database. These are also listed in
the report following the VE List of Problem Banks.

For more on the ValuEngine Quarterly FDIC Report, Click the Image Below