July 9, 2010

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This week's free download is our report on AMR CORP. ValuEngine has issued a
STRONG BUY recommendation for AMR CORP (AMR). Based on the information we
have gathered and our resulting research, we feel that AMR CORP has the
probability to OUTPERFORM average market performance for the next year. The
company exhibits ATTRACTIVE price/sales ratio, market valuation and momentum.
AMR CORP's principal subsidiary is American Airlines, Inc. American is one of the
largest scheduled passenger airlines in the world and provides scheduled jet service
to more than 169 destinations.
Despite uber-investor Warren Buffett's maxim to avoid airlines as investments,
our models have been quite adept at working them from both the long and short
perspectives over the past year or so. The industry appears to be reaping the benefits
of the austerity measures and the additional fee structures they imposed in the wake
of the onset of the recession and the associated spike in fuel costs. AMR CORP reports
increased traffic on routes as well as increased load factors for the month of June. In
fact, the latest load factors approached levels not seen since June, 2007. AMR CORP
leads our screen for 5-Engine stocks in terms of short-term forecast returns.
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MARKET OVERVIEW

Index started week Thursday Close 3 day change 4 day change % ytd
DJIA 9689.21 10139 449.79 4.64% -2.80%
NASDAQ 2122.28 2175.4 53.12 2.50% -5.19%
RUSSELL 2000 605.06 620.27 15.21 2.51% -1.25%
S&P 500 1028.09 1070.25 42.16 4.10% -4.15%

Summary of VE Stock Universe

Stocks Undervalued 72.09%
Stocks Overvalued 27.91%
Stocks Undervalued by 20% 36.46%
Stocks Overvalued by 20% 9.66%

SECTOR OVERVIEW
Sector Change MTD YTD Valuation Last 12- P/E Ratio
MReturn
Basic Industries 1.11% 2.61% 26.80% 8.57% undervalued 51.13% 22.87
Capital Goods 1.13% 2.34% 0.66% 9.77% undervalued 36.20% 20.35
Consumer Durables 1.09% 1.71% -1.10% 17.62% undervalued 51.85% 16.75
Consumer Non-Durables 1.50% 2.64% -2.46% 9.58% undervalued 37.17% 17.3
Consumer Services 1.10% 1.50% -0.69% 14.75% undervalued 36.82% 20.54
Energy 1.30% 4.70% -9.13% 4.50% undervalued 45.14% 23.94
Finance 1.04% 1.75% 4.51% 8.02% undervalued 22.06% 17.39
Health Care 1.16% 0.45% 0.02% 17.41% undervalued 23.87% 20.36
Public Utilities 0.56% 3.06% -5.52% 8.12% undervalued 20.12% 17.21
Technology 0.24% 1.91% 1.69% 15.18% undervalued 40.51% 26.62
Transportation 1.36% 2.53% 2.15% 7.03% undervalued 34.69% 19.07
--Ratings Coverage Increased
Effective Immediately, we have increased our stock ratings coverage ! In an
effort to increase the number of rated stocks we provide to our clients, we have
partnered with Zacks Investment Research, a world leader in fundamental financial
data. This new partnership allows us to provide ratings coverage on more than 5700
U.S. equities, ADRs, and foreign stocks that trade on U.S. markets--as opposed to only
4000 tickers under our old data provider.
That's an increase of 43% !
We have implemented our new data feed this week, so you may notice a
change in the number of stocks we cover as well as some fluctuations in certain
datapoints--such as rating, valuation, and forecast. The switch in data providers may
also change the extent of coverage on individual tickers due to differences in our
historical database. Some stocks may no longer have certain data points available
due to this transition.
Via extensive testing, we have determined that the new data set will provide a
positive effect on the performance of our key portfolios and engine ratings. We
believe the increase in performance and full ratings coverage will further bolster our
position as the industry leader in valuation and forecast.
We hope to keep any disruption in service to a minimum and provide all of our
clients with a seamless conversion. We appreciate your patience and understanding
as we complete this conversion.
If you have any questions about our new coverage or ratings, please don't
hesitate to contact us at support@valuengine.com or (800) 381-5576

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--Catching Up with TK NG
Explorations of Beta and Market Sentiment Continued

Former ValuEngine Analyst and Quant Guru Tk Ng published the following on his new
blog Technifundamentals this week. It has been edited for presentation in our
newsletter. The complete version--along with other content of interest, can be found
HERE.
Editor's Note: The Following was published by TK Ng on July 3, 2010. So, let's see
how his predictions stand up!
Perhaps 80 % of a stock's performance is determined by its Beta. In times of
jittery nerves and low confidence in the market, the average Beta of stocks rise. Thus,
no matter how good a stock picker you are, you are at the mercy of the market--at
least for the short term. Two weeks ago, our exploration of Beta and Visual Finance
had a pessimistic view of the market, and this proved to be true as the SP 500 suffered
some pretty hefty declines. This week, we continue our exercise with ValuEngine and
our Viscovery SOMine Software.
NOTE: For a summary of our terms, theory, and practice, see HERE.
The basic method for using Beta calculations and visual finance to gauge
market sentiment/direction is this: a SOM of the component stocks of the S&P500 is
constructed. This SOM represents the basic topology of the market. We also create
six stock portfolios based on the Long and Short sides of the three ValuEngine
benchmark portfolio strategy screens. Remember that the VE Standard Strategy=
Valuation; VE Forecast Strategy= Growth, and VE Star Strategy= Quality.* We then
plot our initial basket against the backdrop of the S&P500 component stocks and
examine the clusters of the resultant SOM.
*NOTE: Subscribers can run their own screens for the long sides of the benchmark
portfolio strategies HERE
Prior to overlaying on the SOM, each of our ValuEngine picks is labeled with
their benchmark strategy, the sector they belong to, and whether they are Long or
Short positions. The position of a label is approximately the position of the node on the
SOM that the stock occupies. The S&P500 component stocks are not labeled and the
empty spaces represent the nodes on the SOM that they occupy.
For comparison's sake, here is our original SOM from two weeks ago:

B=Basic Industries, C=Capital Goods, D=Consumer Durables, ND=ConsumerNonDurables, S=Consumer

Services, E=Energy, F=Finance, H=HealthCare, T=Technology, TP=Transportation, U=Public Utilities.
V=Valuation, G=Growth, Q=Quality. L=Long, S=Short.
And here is the SOM as of the close July 2nd.

B=Basic Industries, C=Capital Goods, D=Consumer Durables, ND=ConsumerNonDurables, S=Consumer

Services, E=Energy, F=Finance, H=HealthCare, T=Technology, TP=Transportation, U=Public Utilities.
V=Valuation, G=Growth, Q=Quality. L=Long, S=Short.

Comparing the two SOMs shows that there is not much change in the
situation--there is little difference in the size of the three clusters. Most of the Long [L]
stocks are in S3, but S3 only comprises 7.52 % of our stock Universe. Most of the Short
stocks [S] are in S2--which makes up 19.63 %. S1 encompasses the remainder, which
in this case are the components of the SP500.
 In terms of Beta, S1 with-- an average Beta of 1.189-- confirms that our SOM is
well constructed since it consists primarily of the S&P 500 components (and the Beta
of the Index is 1.00.) The average Beta of S3 is 1.985 and the average Beta of S2 is
1.604. So, the longs in S3 are more sensitive to the overall market.

Here's our SOM Beta map:

 If we look at some selected S3 stocks, we find that many of them are very high
in terms of Beta.

Valuation
Ticker Company Name Beta Sector
(%)
KFN KKR FINANCIAL HOLDINGS LLC -51.9 2.91 FINANCE
CONSUMER
GCI GANNETT INC DEL -36.88 2.68
SERVICES
GOL LINHAS AEREAS
GOL -27.78 1.88 TRANSPORTATION
INTELIGENTES S
FBL FINANCIAL GROUP - CLASS
FFG -37.35 2.64 FINANCE
A
UTR UNITRIN INC -30.8 1.53 FINANCE
CONSUMER
AM AMERICAN GREETINGS CORP -35.76 2.14
SERVICES
CONSUMER
REV REVLON -26.64 2.24
NON_DURABLES
BASIC
CBT CABOT CORPORATION -38 1.65
INDUSTRIES

I still don't see a strong call from this exercise one way or the other. In such a
wishy-washy situation, one method of gauging market sentiment is to examine the
ratio of long to short selections that fall within the realm of cluster S1. If we do that,
we find that there are are 28 L stocks and 21 S stocks. Thus the optimistic/pessimistic
ratio is positive at 28/21= 1.33

Thus--as of July 3, 2010-- I would venture to say that the selling has abated and
this week will see a mild rebound.

Editor's Note: As of this writing, the market is up more than 4.5% since last Friday,
seems like TK Ng made the right call!
--VE Chief Market Strategist Richard Suttmeier in
the News
Suttmeier Chosen to Participate in Shiller Housing Market Survey
Chief Market Strategist Richard Suttmeier was chosen to be a member national
housing market survey conducted by Yale economist Robert Shiller. As a regular
participant in this survey, Suttmeier will add his outlook on the housing market to those
of other nationally-known experts and help create one of the nation's most-watched
economic indicators. Congratulations Richard!
Suttmeier Appears on Yahoo Financial Media
Suttmeier also made the rounds of the financial media last week and provided
his views on a variety of topics to Yahoo's Tech Ticker. We provide links to his recent
appearances below. Click on any of the screen shots below to see and hear
Richard's views on the housing market, the DJIA's trading range, and more.
--New FREE Daily Newsletter Now Available
Richard Suttmeier is ValuEngine's Chief Market Strategist.
With our new FREE ValuEngine Four-in-Four Daily
Newsletter, you'll start your trading day with critical
market information from the Chief Market Strategist
who:
1. Correctly called the bottom of the market
downturn in March, 2009
2. Warned of an impending housing meltdown in
early 2005
3. Predicted the most recent market correction in
April, 2010.

Our Four-in-Four brings you ValuEngine Chief Market Strategist Richard

Suttmeier's latest thoughts and analysis on market trends, key indices, individual
stocks, the regulatory environment, and much, much more.
Richard uses his 35 years of experience as a bond-trader, technical analysis,
and the fundamentally-powered, quant-based systems at ValuEngine to write his
Four-in-Four newsletter every trading day. We are offering it FREE to you now
because Richard's insights have been so helpful to the investment strategies of our
clients in the past.

Click HERE or on the logo below to Sign Up for Chief Market Strategist Richard
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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

The Ten Year--Semiannual and quarterly supports are 3.479

and 3.486 with my annual and weekly pivots at 2.999 and 2.941,
and daily, annual, quarterly and semiannual resistances at 2.849,
2.813, 2.495 and 2.249. Yields should stop their decline between
2.999 and 2.813.

Commodities and Forex

Comex Gold--Quarterly support is $1140.9 with annual support at $1115.2. Daily

and semiannual pivots are $1196.5 and $1218.7, and weekly, semiannual and
monthly resistances at $1238.4, $1260.8 and $1279.3. The all time high of $1266.5 set
on June 21st was a test of June’s monthly resistance and the $1260.8 to $1279.3
should be a significant top for gold.

Nymex Crude--Weekly and quarterly supports are $71.71 and $56.63 with daily
and annual pivots at $73.18 and $77.05, and monthly and semiannual resistances at
$79.36 and $83.94, which should limit the upside as the global economy slows down.
The 200-day simple moving average provides a resistance at $77.22.

The Euro--Daily support is 1.2518 with monthly resistance at 1.2670 and the 200-
day simple moving average at 1.3750. Monthly, weekly and quarterly supports are
1.2035, 1.1957 and 1.1424.
Major Indices

The Dow--Weekly and daily supports are 9,856 and 9,653 with the 21-day, 50-
day and 200-day simple moving averages at 10,115, 10,338 and 10,362, and my
annual pivot at 10,379. MOJO is tying to rise from dipping into oversold territory with
new semiannual and monthly resistances at 10,558 and 10,891 after my annual
resistance at 11,235 was tested at the April 26th high at 11,258, which marked the end
of the bear market rally that began in March 2009. We are in the second leg of the
multi-year bear market that began in October 2007.

Key Crossovers-- The 50-day/200-day SMA crossover is a critical technical

indicator and a bearish sign. The S&P 500 had the crossover last Friday, but my annual
support at 1014 held the day before. These other major averages: NASDAQ,
Transports, Russell 2000 and the SOX, have not had the crossover.

Housing

Mortgage applications to refinance homes jumped 9.2% last week to the

highest level since May 2009. Mortgage applications to purchase homes sunk to
nearly a 13-Year low. Low mortgage rates are the factor for higher demand for
refinancings while the end of the home buyer tax credits on April 30th continues to
drag demand for home purchases. Keep in mind that an application does not mean
that a new loan has been approved and that applicants can have multiple
applications at several banks. Remember that while mortgage rates are at record
lows that the spread versus the 10-Year US Treasury has widened from 115 basis points
on March 31st to 161 on Wednesday. This is not a sign of strength in the housing
market!

--The ValuTrader Model Portfolio Newsletter

The ValuTrader Model Portfolio Newsletter is based on ValuEngine Chief Market
Strategist Richard Suttmeier's proprietary market analytics. Suttmeier combines his
technical analysis expertise with ValuEngine's proprietary valuation, forecast, and
ratings data for more than 4000 equities trading on US markets to come up with a 20
stock portfolio tailored to current market conditions. With ValuTrader, subscribers
access Suttmeier's "Buy and Trade" strategy with a portfolio designed to function well
in both up and down markets.
For more on the Suttmeier ValuTrader Newsletter Portfolio, Click the Logo Below