November 4, 2011

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MARKET OVERVIEW

Index
DJIA NASDAQ RUSSELL 2000 S&P 500

started week
12229.22 2705.89 752.44 1284.96

Thursday Close
12044.5 2697.97 751.53 1261.15

4 day change
-184.72 -7.92 -0.91 -23.81

4 day change %
-1.51% -0.29% -0.12% -1.85%

ytd
2.70% 0.73% -5.25% -0.98%

Summary of VE Stock Universe

Stocks Undervalued Stocks Overvalued Stocks Undervalued by 20% Stocks Overvalued by 20% 75.64% 24.36% 42.53% 7.76%

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
2.82% 1.92% 2.13% 2.22% 1.70% 1.84% 0.88% 1.25% 1.61% 2.17% 1.23% 1.38% 1.25% 1.36% 1.91% 1.80%

MTD
4.44% 3.83% 5.54% 4.47% 3.58% 4.29% 3.09% 3.39% 4.06% 5.13% 2.86% 3.59% 3.92% 3.44% 3.54% 3.50%

YTD
7.38% -26.65% -16.62% -3.65% -5.35% -20.33% -8.66% -13.19% -6.68% -11.26% -3.32% -9.83% -14.63% 0.84% -5.56% 9.55%

Valuation
14.71% undervalued 12.95% undervalued 15.16% undervalued 14.91% undervalued 17.18% undervalued 20.43% undervalued 16.70% undervalued 9.50% undervalued 16.11% undervalued 18.44% undervalued 21.30% undervalued 12.65% undervalued 14.97% undervalued 12.38% undervalued 12.60% undervalued 2.36% undervalued

Last 12MReturn
3.23% 6.52% 0.34% 1.27% -0.62% -10.90% -0.85% -2.11% -2.47% 2.45% 1.48% 0.17% 13.39% 12.59% -6.65% 4.00%

P/E Ratio
22.3 32.09 33.89 30.53 36.6 38.54 31.12 17.9 19.4 19.97 29.42 21.48 36.88 29.14 25.45 21.44

Sector TalkConsumer Staples

Below, we present the latest data on leading Consumer Staples 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 Consumer Staples Sector Stocks--Short-Term Forecast Returns

Ticker
SNMX JOBS SCHL MED COT

Name
SENOMYX INC 51JOBS INC-ADR SCHOLASTIC CORP MEDIFAST INC COTT CORP QUE

Mkt Price
4.54 46.05 26.95 15.35 7.15

Valuation(%)
-47.32 -33.78 -10.52 -45.47 -24.09

Last 12-M Retn(%)

-6.97 -1.1 -11.26 -38.1 -12.38

Top-Five Consumer Staples Stocks--Long-Term Forecast Returns

Ticker
SNMX JOBS BGS ABV SAM

Name
SENOMYX INC 51JOBS INC-ADR B&G FOODS CL-A AMBEV-PR ADR BOSTON BEER INC

Mkt Price
4.54 46.05 21.69 33.81 100

Valuation(%)
-47.32 -33.78 7.79 -0.97 -10.24

Last 12-M Retn(%)

-6.97 -1.1 82.27 27.15 36.65

Top-Five Consumer Staples Stocks--Composite Score

Ticker
NWS BRFS CCE DMND TUP

Name
NEWS CORP INC BRF-BRASIL FOOD COCA-COLA ENTRP DIAMOND FOODS TUPPERWARE BRND

Mkt Price
17.51 20.64 26.1 51.57 56.26

Valuation(%)
-28.74 -13.72 -11.3 -31.33 -9.82

Last 12-M Retn(%)

7.56 40.98 11.49 15.81 21.43

Top-Five Consumer Staples Stocks--Most Overvalued

Ticker
SAFM CALM HANS STON RDEN

Name
SANDERSON FARMS CAL-MAINE FOODS HANSEN NATURAL STONEMOR PTNRS ELIZABETH ARDEN

Mkt Price
50.64 33.84 90.13 28.84 34.61

Valuation(%)
78.08 53.72 33.04 28.36 23.65

Last 12-M Retn(%)

15.8 22.39 75.73 8.58 65.68

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What's Hot-The Hard Trade

Yaron Sadan of Osher Capital on Financials
ValuEngine is pleased to announce another addition to our stable of high quality investment newsletters. Our latest premium newsletter comes to us from Yaron Sadan and is called "The Hard Trade." Sadan is the founder and president of Osher Capital Advisors, LLC (Osher). Before starting Osher, Sadan worked in the private wealth management group of Goldman Sachs.

The Problem with Pessimism The problem with pessimism is that youre always almost right and almost on time. The simplest proof in the markets is the guy who is always calling for a crash sure he will be right at some point, but all the rest of the time as the market does nothing or goes up, hes actually wrong and not admitting it. Before you say that the problem is with all prediction, let me encourage you to wait with that argument. The pessimist is driven towards inactivity. Without hope for the future, without a vision towards success, the pessimist can only criticize and wrap himself in the security of not trying. Why am I bringing this up now? Ive recently been getting more notes than usual about my pessimism. Maybe thats a result of staying in certain positions, or even because I havent changes my positions much in the face of a supposedly changing market. So let me assure you, dear reader, that I am not at all pessimistic nor depressed. Some people take a short position as an expression of their pessimism about a company or currency or what have you. They get a great sense of accomplishment when the stock eventually goes down (See, I was right) and have to battle their emotions when the stock goes up (If I can just withstand the pain). Not me. I dont hope to be proven right and dont feel an emotional stake in either direction. I just expect. My euro position is a simple example: contrary to some emails Ive received, I dont HOPE that the European currency collapses. As an investor, I dont have any emotional stake one way or the other, although as a global citizen I do. Instead, I have an expectation of what will unfold. Its one of a number of scenarios that might unfold. If I knew exactly which scenario was right, I could take a much larger position, but I dont, so I limit my exposure through position sizing. Then I wait. I wait for the facts to change. I wait for different scenarios to unfold. I wait for my expectation to be achieved, or not. I have been short the euro since October 2009 and, other than periodically adding the position, I havent changed my stance. Im not emotional about the position and it has moved in the direction I expected, in the opposite direction, and everything in between so many times, and with so much internal volatility over the past two years, that it would be difficult to stay with it if I did have emotions involved . I have been right and wrong enough times in this one position that the challenge is to step away from those terms completely and just focus on whether the position makes sense today. Did the facts change? Have my expectations for future scenarios, returns, probability, etc. change? Have policy makers addressed the issues I was seeing before? So far, the answer is no, so I stay with the position. Is there a need to add or subtract to it? Today, there isnt, but some days Ive added to it (and mentioned it in these pages).The same is true for all my positions.

There has been, however, a big challenge in adding new positions. Two big reasons I have discovered: a lack of clarity about future scenarios surrounding different asset classes, and an expectation that cash will outperform most of the global asset classes. That is not my being pessimistic. Its not an emotional prediction. It is simply an expectation that, based on the current available information, the risk involved with allocating cash to different investments is not worthwhile. Stated another way, it is an active allocation to a large cash position. Investing in cash is not a passive investment. For anyone dealing with clients and the pressures of putting money to work that will ring true. Cash is always working against you as a money manager. For one, there is always something going up which clients think you should have identified. Second, clients dont want to pay fees on your active allocation to cash. Third, if markets go up you have a tough time catching up. Lastly, cash is always losing money to fees and inflation. In that context, it is easier to take any other position than to take a position in cash. Thus, when I allocate a portion of my portfolios to cash, it has to be an overwhelming expectation that it will outperform the alternatives. So for now, dont think of my as pessimistic, think of me as someone who expects asset classes to depreciate and is just implementing the investments that express that expectation. I dont hope to be right, just like Im not afraid to be wrong.

The Hard Trade Premium Newsletter is now available on our website HERE

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--(2.061) Weekly, semiannual, quarterly and annual value levels are 2.191, 2.414, 2.669 and 2.690 with daily and monthly pivots at 2.048 and 1.963, and semiannual risky level at 1.672. My monthly pivot was tested on Tuesday and 1.672 was tested on September 23rd. Commodities and Forex Comex Gold-- ($1765.6) Semiannual, weekly, semiannual and annual value levels are $1644.8, $1537.5, $1469.9 and $1,356.5 with my quarterly pivot at $1738.4 and daily and monthly risky levels at $1817.9 and $1821.50, and the September 6th all time high at $1923.7. The years low was $1535.0 set on September 26th.

Nymex Crude--($94.04) The October 4th year-to-date low is $74.95 with my weekly value level at $86.38, daily and monthly pivots at $94.08 and $95.67, and quarterly and annual risky levels at $100.34, $99.91 and $101.92. The high and low for oil happened on the same days as the Dow with the high at $114.83 per barrel on May 2nd. The Euro--(1.3815) Weekly, and quarterly value levels are 1.3319 and 1.2598 with a daily pivot at 1.3862, and monthly and semiannual risky levels at 1.3901, 1.4568, 1.4752 and 1.4872. Major Indices Equity Technicals Weekly MOJO (12x3x3 weekly slow stochastic readings/technical momentum) are rising with the major equity averages above their five-week modified moving averages at; 11,570 Dow Industrials, 1213.4 SPX, 2596 NASDAQ, 4664 Dow Transports and 708.15 Russell 2000. This defines positive weekly chart profiles. Odds favor that we will have weekly risky levels next week instead of value levels as I still project that stocks will not see new highs for 2011. My monthly pivots are; 11,928 Dow Industrials, 1229.3 SPX, 2636 NASDAQ, 5034 Dow Transports and 739.80 Russell 2000. Quarterly risky levels are; 12,507 Dow Industrials, 1303.7 SPX, 2807 NASDAQ, 5179 A / 5359 Q Dow Transports and 784.16 A / 802.96 Q Russell 2000. Equity Fundamentals: Stocks are extremely undervalued 75.6% of all stocks are undervalued / 24.4% of all stocks are overvalued. On October 4th 93.5% of all stocks were undervalued. All sixteen sectors are undervalued, fourteen by double-digit percentages. Two are undervalued by 20.4% to 21.3%. Back in March 2009 the sectors were undervalued by 33% to 45%.

Key Levels for the Major Equity Averages Dow --(12,044) My annual value level is 11,491 with weekly, daily and monthly pivots at 11,694, 11,987 and 11,928, and quarterly and annual risky levels at 12,507 and 13,890. The October 4th low was 10,404.49 with the May 2nd high at 12,876.00. S&P 500--(1261.1) The October 4th YTD low is 1074.77 with my annual pivot at 1210.7, monthly, daily and weekly pivots at 1229.3, 1250.8 and 1231.9, and quarterly and annual risky levels at 1303.7 and 1562.9. The YTD high is 1370.58. My annual risky level is 1562.9. NASDAQ (2698) The October 4th YTD low is 2298.89 with my annual value level at 2335, monthly, daily and weekly pivots at 2636, 2654 and 2686, and quarterly risky level at 2807, and the YTD high at 2887.75. My annual risky level is 3243. NASDAQ 100 (NDX) (2368) - The YTD low is 2034.92 with a monthly value level at 2294, a daily pivot at 2323, and weekly, and quarterly risky levels at 2394 and 2440, the YTD high at 2437.42 and annual risky level at 2590. Dow Transports (4930) The October 4th YTD low is 3950.66 with daily, weekly and semiannual value levels at 4873, 4739, 4335 and 3868, and monthly, annual and quarterly risky levels at 5034, 5179 and 5359, and the YTD high / all time high at 5627.85 on July 7th. Russell 2000 (751.47) The October 4th YTD low is 601.71 with daily, weekly and monthly pivots at 743.67, 713.93 and 739.80, and annual and quarterly risky levels at 784.16 and 802.96, and the YTD high / all time high at 868.57 on May 2nd. The SOX (387.16) The October 4th YTD low is 322.24 with a monthly value level at 339.47, a daily pivot at 384.25, and weekly and quarterly risky levels at 398.86 and 417.63, and the YTD high at 450.79.

Recent Media This week Richard Suttmeier appeared on Yahoo! Finance's "Breakout" program to discuss his market outlook for the rest of 2011. "Breakout" is Yahoo! Finances new daily interactive investing show. In this segment, Suttmeier discusses how he used ValuEngine's Valuation Model and Market and Sector Overview functions to help him time his recent market calls. He also takes a look at EUR/USD, crude oil, and gold. The key analysis provided by Suttmeier on Yahoo! was his assertaion that the markets will post no new highs for the rest of the year. You can watch Suttmeier on the "Breakout' program by clicking the image below:

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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