September 7th, 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
13092.15 3063.25 813.17 1406.54

Thurs. Close
13292 3135.81 837.95 1432.12

Change
199.85 72.56 24.78 25.58

% Change
1.53% 2.37% 3.05% 1.82%

YTD
8.79% 20.37% 13.10% 13.88%

Summary of VE Stock Universe

Stocks Undervalued Stocks Overvalued Stocks Undervalued by 20% Stocks Overvalued by 20% 56.88% 43.12% 23.20% 13.91%

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
1.83% 2.44% 1.90% 0.82% 1.41% 1.54% 1.34% 1.13% 1.15% 1.35% 1.25% 1.77% 1.02% 1.69% 1.17% 1.32%

MTD
1.53% 1.80% 2.29% 1.70% 1.46% 1.92% 1.44% 1.37% 3.13% 1.40% 2.27% 1.39% 0.62% 2.35% 1.15% 1.69%

YTD
4.92% 5.54% 2.27% 8.58% 9.23% 89.34% 14.20% 15.33% 25.88% 7.63% 20.15% 11.06% -7.15% 15.41% 7.59% 1.73%

Valuation
3.15% undervalued 7.01% undervalued 0.82% overvalued 2.11% overvalued 6.27% overvalued 3.63% overvalued 5.08% overvalued 10.67% overvalued 10.25% overvalued 0.66% overvalued 10.88% overvalued 4.03% undervalued 1.43% undervalued 10.60% overvalued 3.77% undervalued 15.50% overvalued

Last 12MReturn
2.79% 4.64% -26.92% 11.34% 3.09% 21.87% 7.88% 8.45% 14.23% 1.11% 5.84% 11.02% -12.46% 20.17% -3.01% 4.27%

P/E Ratio
18.22 16.64 24.67 28.48 42.59 43.5 33.96 20.68 18.55 19.1 44.39 14.1 32.6 21.42 32.41 19.43

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

Ticker
CRBC HCII BANR WIBC ASPS

Name
CITIZENS BKNG HOMEOWNERS CHCE BANNER CORP WILSHIRE BCP ALTISOURCE PORT

Mkt Price
20.45 20.89 25 6.49 87.72

Valuation(%)
-34.12 18.82 -66.89 -31.5 20.05

Last 12-M Retn(%)

184.82 247.01 79.21 115.61 149.49

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

Ticker
CRBC HCII ASPS GCA BANR

Name
CITIZENS BKNG HOMEOWNERS CHCE ALTISOURCE PORT GLOBAL CASH ACS BANNER CORP

Mkt Price
20.45 20.89 87.72 7.7 25

Valuation(%)
-34.12 18.82 20.05 0.12 -66.89

Last 12-M Retn(%)

184.82 247.01 149.49 196.15 79.21

Top-Five Finance Sector Stocks--Composite Score

Ticker
AIG MBI RF KEY AEG

Name
AMER INTL GRP MBIA INC REGIONS FINL CP KEYCORP NEW AEGON N V

Mkt Price
34.22 11.18 7.22 8.51 5.4

Valuation(%)
-75 -44.33 -39.82 -39.29 -30.21

Last 12-M Retn(%)

46.74 48.47 87.05 42.31 44.77

Top-Five Finance Sector Stocks--Most Overvalued

Ticker
RSO TRST MNR FSP BKMU

Name
RESOURCE CAPITL TRUSTCO BK -NY MONMOUTH RE CLA FRANKLIN ST PPT BANK MUTUAL CRP

Mkt Price
6.1 5.7 11.5 11.36 4.33

Valuation(%)
300 300 300 300 300

Last 12-M Retn(%)

36.16 36.69 56.04 2.53 49.83

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Free Report Download for Subscribers

As a bonus to our Free Weekly Newsletter subscribers, we are now offering a FREE DOWNLOAD of one of our $ 25.00 Detailed Valuation Reports.
This week's free download is our report on Amazon.com. (AMZN). Wells Fargo & Company is a diversified financial services company providing banking, insurance, investments, mortgage and consumer finance services through stores, its Internet site and other distribution channels across North America as well as internationally. The company has weathered the financial crisis better than most large banks and is currently in the news as a key holding of investment guru Warren Buffett. Wells Fargo's strong recent performance has helped Buffett's Berkshire Hathaway perform much better this year.

Weekly Subscribers can download a FREE Detailed Valuation Report on Amazon.com 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.

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What's HotFDIC Report Shows Improved Banking Picture

ValuEngine Chief Market Strategist Richard Suttmeier is an expert on the US Banking System and uses the health of the system as a leading economic indicator. He distills his thoughts on the banking system in our FDIC Report. The latest update of the report is now available. In his summary of the report he notes the following: At ValuEngine, we slice and dice the publicly traded banks and come up with our proprietary list of problem banks andunlike the FDIC--we name names. We do this to help investors pick the winners from the potential losers among the community banks. The candidates have overexposures to C&D loans, CRE loans and have real estate loan pipelines that are 80% or more funded. The statistics have improved, but the banking system still has 88 publicly traded banks that are overexposed to C&D loans, 404 that are overexposed to CRE loans only, 43 that have their real estate loans 100% funded, and another 316 that have their pipelines funded by 80% to 99%. Since home prices peaked in the second quarter of 2006, the number of 1 to 4 family residential mortgages is down $280.5 billion, or 13.0%. The total of Construction & Development Loans is down $296.5 billion, or 57.7%. Other Real Estate Owned (OREO) is up $36.6 billion, or 701%. These statistics show that the banking system still has stress to be unwound. The latest QBP from the FDIC shows a continuingalbeit slowrecovery. For the 12th consecutive quarter year-over-year earnings registered a gain. As has been the case for prior quarters, these gains were generated as banks lowered loan-loss provisions and sold loans and other assets. Shares of community banks, regional banks and the homebuilders have had great stock gains year-to-date-- and since October 2011. The Americas Community Bankers Index (ABAQ) ended August up 13.0% yearto-date and up 37.7% since October 2011. The PHLX KBW Banking Index (BKX), which includes the four too big to fail money center banks, is up 19.9% year-to-date and 45.1% since October 2011. The PHLX Housing Sector Index (HGX) is up a staggering 41.8% year-todate and 98.2% since October 2011. HGX set a multi-year high on August 31, 2012.

Despite this improvement, we are nowhere near normal conditions. Troubled assets and the number of problem banks remain high. The FDIC has significantly slowed bank failure procedures. Year-to-date, there have been 40 failures--versus 68 failures year to date in 2011. Only fifteen banks were seized in the second quarter-- the lowest number since the fourth quarter of 2008. The table below tracks bank ratings and the number of problems bank back to Q2 2009. As you can see, while overall totals varied slightly, on a percentage basis the proportion of problem banks--publicly traded FDIC insured financial institutions overexposed to Construction & Development Loans and/or Nonfarm nonresidential real estate loans, with 1-Engine--Strong Sell, or 2-EngineSell--was fairly consistent on a quarterly basis from 2009-2011. While the percentage of problem banks was falling slightly from Q2 2009-Q2 2011, more than half were in danger of failure.

Q2 2009
TOTAL BANKS STRONG SELL % SELL % HOLD % BUY % STRONG BUY % PROBLEM BANKS %
212 31.13 30.66 37.26 0.47 0.47 61.79

Q2 2010
260 25.00 34.23 34.23 5.00 1.15 59.23

Q2 2011
216 19.44 36.57 42.13 1.85 0.00 56.02

Q2 2012
298 12.75 7.05 39.60 31.54 7.05 19.80

However, since last year there has been a radical re-ordering of the picture. For Q2 2012, the FDIC Report shows a big improvement in VE Ratings for banks. Whilemany of our tracked banks remain overexposed to C&D or CRE loans and may have maxed out pipelines, less than 20% of them are now rated as "problem banks" and almost 39% of them are rated a BUY or STRONG BUY. Our latest ValuEngine FDIC Report is now posted. The report contains loan exposure and/or ValuEngine datapoints on valuation, forecast, and ratings for all of the institutions on our List of Problem Banks. Subscribers may download it HERE. Others interested in the report may find out more on our website by clicking the image to the right

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--((1.671) Semiannual, quarterly and annual value levels are 1.853, 1.869 and 2.502 with weekly and monthly pivots at 1.645 and 1.620, and daily and semiannual risky levels at 1.567 and 1.389. Comex Gold ($1703.7) Semiannual, and annual value levels are $1643.3 and $1575.8 with weekly, daily and semiannual pivots at $1683.3, $1694.6 and $1702.5, and quarterly risky level at $1805.8. Below is my second annual risky level at $1388.4. The weekly chart stays positive on a weekly close above the five-week modified moving average at $1635.1. Nymex Crude Oil ($94.81) Monthly and semiannual value levels are $93.30 and $76.71 with a daily pivot at $94.87, and weekly, annual and quarterly risky levels at $102.06, $103.58 and $107.63. The 200-day simple moving average is $96.62. The weekly chart stays positive on a weekly close above the five-week modified moving average at $92.92. The Euro (1.2634) My weekly value level is 1.2460 with a daily pivot at 1.2609 and monthly and semiannual risky levels at 1.2714 and 1.2917. My semiannual value level lags at 1.1078. The weekly chart stays positive on a weekly close above the five-week modified moving average at 1.2441. Major Indices Daily Dow:(13,292) Daily, annual and semiannual value levels are 13,085, 12,312 and 10,738 with weekly, monthly, annual and quarterly risky levels at 13,360, 13,666, 14,032 and 14,493. The weekly chart profile stays positive on a weekly close above the five-week modified moving average at 13,047.

S&P 500 (1432.1) Daily and annual value levels are 1413.1 and 1363.2 with weekly and monthly risky levels at 1433.0 and 1486.7. My semiannual value level is 1059.7. The weekly chart profile stays positive on a weekly close above the five-week modified moving average at 1391.2. NASDAQ (3136) Daily, weekly, annual and semiannual value levels are 3100, 3076, 2698 and 2527 with annual, monthly and quarterly risky levels at 3232, 3340 and 3348. The weekly chart profile stays positive on a weekly close above the five-week modified moving average at 3007. NASDAQ 100 (NDX) (2830) Daily, weekly, annual and semiannual value levels are 2794, 2799, 2603, 2300 and 2239 with quarterly and monthly risky levels at 2991 and 3033. The weekly chart profile stays positive on a weekly close above the five-week modified moving average at 2707. Dow Transports (5045) Daily and semiannual value levels are 4934, 4449 and 4129 with a weekly pivot at 4994, and my monthly risky level at 5279. The weekly chart profile stays negative on a weekly close below the fiveweek modified moving average at 5101. The all time high is 5627.85 set on July 7, 2011. Russell 2000 (837.93) Daily, weekly and semiannual value levels are 831.37, 814.70, 799.93 and 686.25 with my annual pivot at 836.15, and my monthly risky level at 864.06. The weekly chart profile stays positive with a weekly close above the five-week modified moving average at 802.46. The all time high is 868.57 set on May 2, 2011. The SOX (404.53) My daily value level is 394.59 with a weekly pivot at 401.46, and monthly and quarterly risky levels at 438.90 and 450.28. The weekly chart profile stays positive on a weekly close above the five-week modified moving average at 391.48.

ValuEngine.com Tools and Services

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