The ValuEngine Weekly is an Investor Education newsletter focused on the quantitative approach to investing and the tools

available from ValuEngine. 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
ATTENTION Advanced Investors and Finance Professionals:
If you are reading this you should download ValuEngine Institutional Software to see how VE's powerful quantitative tools
can increase your productivity and effectiveness.

October 23, 2009

MARKET OVERVIEW

Thursday 4 day 4 day

Index started week ytd
close change change %
DJIA 9996.67 10081.31 84.64 0.85% 14.92%
NASDAQ 2162.41 2165.29 2.88 0.13% 37.14%
RUSSELL 2000 618.11 613.38 -4.73 -0.77% 22.80%
S&P 500 1088.22 1092.91 4.69 0.43% 21.03%

Summary of VE Stock Universe

Stocks Undervalued 50.70%
Stocks Overvalued 49.30%
Stocks Undervalued by 20% 26.14%
Stocks Overvalued by 20% 27.74%

SECTOR OVERVIEW

Sector Change MTD YTD Valuation Last 12- P/E Ratio

MReturn
Basic Industries 0.53% 8.04% 71.71% 17.98% overvalued 72.54% 26.93
Capital Goods 1.32% 7.23% 41.55% 17.78% overvalued 30.81% 20.92
Consumer Durables 0.61% 7.13% 67.84% 5.07% overvalued 39.25% 28.93
Consumer Non-Durables 0.56% 6.02% 51.66% 12.49% overvalued 38.97% 22.22
Consumer Services 1.15% 6.64% 65.66% 8.58% overvalued 48.64% 23
Energy -0.29% 11.04% 47.63% 21.83% overvalued 34.31% 20.22
Finance 1.35% 2.93% 26.66% 3.99% overvalued 15.66% 19.24
Health Care 0.24% 3.43% 60.72% 7.53% undervalued 40.20% 19.61
Public Utilities 0.42% 5.00% 22.48% 1.16% undervalued 37.69% 16.03
Technology 0.51% 4.38% 68.96% 0.72% undervalued 45.69% 26.82
Transportation 0.32% 5.06% 26.22% 9.37% overvalued 18.79% 17.13
Sector Talk
--Autos
The Obama Administration made news this week with announced limits on executive pay for
officials at firms receiving government bailout funds. Of the seven firms affected, two were
the auto manufacturers General Motors (GM) and Chrysler (privately held but now mostly
held by the US of A?). The recession battered the bottom line and share prices of most--if not
all--of the major manufacturers, but now we see signs of recovery for some.
Below, we present VEI data for the auto manufacturing industry. As you can see, many of
the stocks have rebounded smartly from the depths of their despair and are showing some
pretty remarkable LTM results. Many analysts find that the US "cash for clunkers" program
had a positive impact on auto sales, but question whether this momentum can be maintained
without the subsidy.
However, despite the rebound, our models remain nonplussed with the industry as a whole
and only two tickers (DAI & NSANY) currently earn a buy rating--and keep in mind that
NSANY's remarkable forecast figures may be skewed by recent share price and earnings
gyrations.

Last 12- 5-Yr Forecast Forecast

Mkt Valuation VE P/E
Ticker Name M Retn 1-Month 1-Yr
Price (%) Rating Ratio
Retn(%) (%) Retn(%) Retn(%)
ABG ASBURY AUTOMOTIVE GROUP 14.58 14.26 3 413.38 2.28 -3.35 -31.36 27.77
AXVC AXIAL VECTOR ENGINE CORP 0.2 N/A N/A -4.71 N/A -3.04 -39.73 N/A
BDRBF BOMBARDIER INC 4.5 44.15 N/A N/A N/A -2.74 -29.7 9.37
CSBI Carroll Shelby International Inc 0.27 N/A N/A -10 N/A -1.75 -25 N/A
DAI DAIMLER AG 55.72 -70.01 5 85.73 10.23 0.49 2.18 N/A
DNZOY DENSO CORPORATION 118.4 N/A N/A 51.74 19.54 -1.58 -18.39 13.17
F FORD MOTOR CO 7.76 -8.75 3 269.52 -11.35 -1.07 -9.37 N/A
HMC HONDA MOTOR CO LTD 31.01 20.48 3 44.3 5.07 -1.49 -9.71 N/A
HOG HARLEY-DAVIDSON INC 28.72 N/A N/A 33.71 -14.3 -1.02 -15.44 27.88
MGA Magna International Inc 45.28 N/A N/A 44.16 0.27 -2.75 -38.32 6.68
MOTORS LIQUIDATION
MTLQQ 0.64 -86.79 2 -89.73 -83.47 0.1 -27.7 N/A
COMPANY
NSANY NISSAN MOTOR CO 14.59 -1.62 4 52.3 -7.86 22.77 188.53 N/A
PEUGY PEUGEOT SA 35.75 -19.01 3 51.93 -9.92 -0.44 -9.76 N/A
RYCEY ROLLS-ROYCE GROUP PLC 39.65 31.26 3 85.8 12.79 -2.35 -18.06 84.36
TOYOTA MOTOR
TM 79.89 -5.87 3 17.57 1.19 -0.88 -6.07 N/A
CORPORATION
TRW AUTOMOTIVE HOLDINGS
TRW 18.71 -5.96 3 220.38 1.47 -2.17 -20.87 N/A
CORP
 Ticker Name Mkt Valuation VE Last 12- 5-Yr Forecast Forecast P/E
Price (%) Rating M Retn 1-Month 1-Yr Ratio
Retn(%) (%) Retn(%) Retn(%)
TTM TATA MOTORS LTD 11.7 -47.63 3 145.28 3.65 -1.72 -17.04 N/A
VLEEY VALEO 15.5 -16.21 N/A N/A -2.59 -1.01 -12.47 N/A
VLKAY VOLKSWAGEN AG 35 65.75 3 -42.34 28.54 -0.46 6.19 32.56
VOLVY VOLVO AB 9.81 N/A N/A 85.44 7.29 -1.72 -16.6 N/A
VPWS Viper Powersports Inc 0.23 N/A N/A -34.29 N/A -1.45 -19.03 N/A
VSTN VISTEON CORP 0.16 -82.52 1 -83.51 -90.45 -0.75 -32.93 N/A

What's HOT
--The Morning Briefing Stock of the Day
Straight from Chief Market Strategist Richard Suttmeier's ValuEngine Morning Briefing,
here is the stock of the day.
Amazon.com (AMZN) –Amazon.com, Inc. operates retail Web sites, as well as provides
programs that enable third parties to sell their products on its Web sites in North America and
internationally. AMZN is rated a HOLD according to ValuEngine with fair value at $78.94--
which makes the stock 18.3% overvalued.
 Valuation & Rankings
Valuation 18.64% overvalued Valuation Rank 29
1-M Forecast Return -0.23% 1-M Forecast Return Rank 75
12-M Return 86.94% Momentum Rank 84
Sharpe Ratio 0.35 88
5-Y Avg Annual Return 16.98% 5-Y Avg Annual Rtn Rank 91
Volatility 49.00% Volatility Rank 57
Expected EPS Growth 26.74% EPS Growth Rank 51
Market Cap (billions) 40.35 Size Rank 99
Trailing P/E Ratio 59.22 Trailing P/E Rank 45
Forward P/E Ratio 46.72 Forward P/E Ratio Rank 9
PEG Ratio 2.21 PEG Ratio Rank 20
Price/Sales 1.97 Price/Sales Rank 38
Market/Book 12.39 4
Beta 1.50 Beta Rank 28
Alpha 0.54 Alpha Rank 83

Courtesy Google Finance

Analysis – The daily chart for Amazon shows declining technical momentum, but that could
change quickly given a huge earnings beat after the close on Thursday. Thursday’s close was
above the 21-day simple moving average at 93.29 setting the stage for a positive reaction to
earnings. My quarterly value level is $88.24 with a semiannual pivot at $95.41 and monthly
risky level at $104.31. The monthly level will be a pivot today as the stock is well above it in
after hours trading.
--The ValuEngine Forecast 22 MNS Portfolio

We recently re-balanced our ValuEngine Forecast 22 Market Neutral Strategy Newsletter.

Our portfolio continues to beat the S&P 500 benchmark handily on its long side. For a market
neutral strategy with significant volatility-reducing benefits, our newsletter continues to
perform remarkably well. In fact, this product has been so successful it was recently selected
by Forbes.com for inclusion into its stable of newsletter products. Forbes.com believes that
the VE Forecast 22 MNS Portfolio offers a sophisticated newsletter for investors seeking
access to hedge fund-type strategies without hefty performance fees and onerous qualified
investor requirements.
Since inception in December 2008, our portfolio is up 19.11%.
For more on the VE Forecast 22 Market Neutral Strategy Newsletter Portfolio,
Click the Logo Below

Suttmeier Says
--Commentary and Analysis from Chief Market Strategist Richard Suttmeier

If you have any comments or questions, send them to Rsuttmeier@Gmail.com

Strong Stock MOJO* Shows Some Negative Divergences

Stocks are overbought on their weekly charts. Key supports held on
Thursday reversing the “Key Reversal Days”. There are double tops on
Transports, Russell 2000 and Philadelphia Semiconductor Index (SOX).
Stocks are overvalued according to ValuEngine. It appears that stocks
will remain firm next week through huge Treasury supply, weak
consumer confidence and weak new home sales, as Q3 GDP hits 4% in
its Advanced reading next Thursday morning.
Overall, stocks are overbought technically, and overvalued fundamentally. For short-
term traders, it means buy in anticipation, sell on the news.
Major Indices
The Dow – Overbought MOJO with a reading of 9.1 on a scale of zero to ten. Wedge
resistance is 10,178. If this pattern continues the upside is 10,600 into early December. Held
my weekly support at 9,921 then closed above my annual pivot at 10,012.
NASDAQ – Overbought MOJO with a reading of 8.9 with the 200-week simple moving
average as resistance at 2215. The NASDAQ has been below the 200-week since the week
of September 13, 2008. My weekly pivot at 2169 provided a magnet into the close, but
strength was shy of my monthly resistance at 2183.
Russell 2000 – MOJO is declining with a reading of 7.4, below the overbought level of 8.0.
Daily closes below the 21-day and 50-day simple moving averages at 607.29 and 593.91
targets the 200-day at 503.97. Also stayed shy of my weekly pivot at 615.88.
Dow Transports – Overbought with MOJO at 8.3. Strength continues to stall between annual
resistances at 4037 and 4199. Shows a negative divergence as Transports stayed below my
weekly pivot at 3980. The daily chart is overbought with a MOJO reading of 8.1. The double-
top at 4055 / 4066 is confirmed by a close below the 21-day and 50-day simple moving
averages at 3880 and 3832. This would target the 200-day simple moving average at 3253.
The SOX – Overbought with MOJO at 8.1. This is the closest of the averages I follow that can
confirm an intermediate top, as a weekly close below the five-week modified moving average
at 316.80 shifts the weekly chart to negative. The daily chart shows declining MOJO with a
reading of 6.3. Daily closes below the 21-day and 50-day simple moving averages at 322.93
and 315.43 targets the 200-day at 263.65.

Transports, small caps and semiconductors are typically leading groups, so these are
your negative divergences that could prevent significant additional upside for the
overall stock market.

*“MOJO” - A term for Technical Momentum. MOJO represents the readings from the 12x3 slow stochastics. On
a chart you read MOJO from left-to-right (last measure/current measure) and can determine the momentum for a
given index, stock, or ETF using the following guidelines:

• Overbought (OB): 12x3 weekly slow stochastic above 80 on a scale of zero to 100
• Rising (RM): 12x3 weekly slow stochastic rising above 20, but is below 80
• Flat (F): 12x3 weekly slow stochastic between 20 and 80, but not rising or declining
• Declining (DM): 12x3 weekly slow stochastic is declining below 80, but is above 20
• Oversold (OS): 12x3 weekly slow stochastic is below 20 on a scale of zero to 100
--The VE Quarterly FDIC Report
VE 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.
Highlights from the latest report include the following:
Suttmeier now predicts that several hundred more US banks will fail in the next few years
due to a variety of factors--in fact, many banks highlighted in past FDIC reports have already
failed.
There are currently 763 institutions overexposed to Construction & Development
Loans or Nonfarm NonResidential Real Estate (CRE) loans as per the FDIC's own
guidelines. This figure represents a decline over last quarter's total—which was 804.
However, the decline is largely a result of bank failures rather than a reduction in exposures to
the problematic loan categories.
As of September 10, 2009, there were 212 banks overexposed to C&D and/or CRE loans in
the ValuEngine database with full data coverage. Of these overexposed banks, 66 were rated
“1-Engine” Strong Sells, 65 were rated “2-Engine” Sells, 79 were rated “3-Engine” Holds, 1
was rated a “4-Engine” Buy, and one was rated a “5-Engine” Strong Buy. This means that
there are currently 131 banks rated Sell or Strong Sell that are also overexposed to
C&D and/or CRE loans.
This quarter's report is now available for purchase via our website. In addition to the
valuable VE and FDIC data, the report also contains critical ValuEngine data points on the
home building industry, technical levels for a variety of banking and housing indices, policy
prescriptions, and other analysis.

To find out more or subscribe to the ValuEngine Quarterly FDIC Report, click HERE.
--VE Now Available on Bloomberg Terminal
ValuEngine has long been a provider of independent research to both retail and institutional
clients. In addition to our retail website and software package, we have contracts with major
banks and investment advisors such as UBS, Deutsche Bank, Wachovia Securities, and
others.
In an effort to further our reach into the professional finance space, we have now partnered
with Bloomberg LP and have made our proprietary model data, stock reports, and premium
newsletter content available for download via the Bloomberg terminal. This effort will bring
our rating, valuation, and forecast data on over over 5000 US, Canadian, and Japanese
stocks to an even larger audience of investment professionals.
To access ValuEngine on any Bloomberg terminal, just hit VLUE <GO> or contact
ValuEngine at Support@ValuEngine.com or (800) 381-5576

--Canadian Stock Reports Now Live on Scotia iTRADE

ValuEngine has added the Canadian stock market to its coverage universe and entered into
a partnership with Canada’s Scotia iTRADE. ValuEngine will provide Scotia iTRADE’s online
stock-trading service with access to individual stock reports for more than 500 Canadian
equities and 4,000 US equities. The addition of Canadian equities coverage further expands
ValuEngine's stock universe to @ 4,500 individual stocks trading on US and Canadian
markets and is part of ValuEngine's effort to be the world leader in total market coverage.
Scotia iTRADE is owned by Scotiabank, one of North America's premier financial institutions
and Canada's most international bank. In March of 2009, Scotiabank completed a rebranding
to Scotia iTRADE from E*TRADE Canada, which the Bank purchased in 2008. With close to
69,000 employees, Scotiabank Group and its affiliates serve approximately 12.8 million
customers in some 50 countries around the world. Scotiabank offers a diverse range of
products and services including personal, commercial, corporate and investment banking.
ValuEngine welcomes our new Canadian clients!
Bienvenue a ValuEngine!