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January 5, 2010
VALUATION WATCH: Our models find that overvaluation is approaching
levels typically seen when a market correction is imminent. Overvalued
stocks now make up almost 63% of our universe and 30% of the universe is
calculated to be overvalued by 20% or more. 15 of 16 Sectors are now
calculated to be overvalued.

This Bet Paid Off

Forecast Model Pick Melco Crown Entertainment (MPEL,$MPEL) Up 20% in
19 Days
Today we provide info on yet a recent success story from our Forecast
Model. When we completed our last re-balance of the ValuEngine Forecast Model
Market Neutral Strategy Portfolio Newsletter, subscribers received two picks from the
Consumer Discretionary Sector.
The first pick, Hyatt Hotels (H) is up more than 5%. The second pick, Melco
Crown Entertainment (MPEL) is an owner and developer of casino gaming and
entertainment resort facilities focused on the market found in Macau. Since being
selected as one of our top two stocks in the sector 19 days ago, Melco Crown
Entertainment is up more than 21%.
Currently, ValuEngine maintains its BUY recommendation for Melco Crown
Entertainment. Based on the information we have gathered and our resulting
research, we feel that Melco Crown Entertainment has the probability to
OUTPERFORM average market performance for the next year. The company exhibits
ATTRACTIVE momentum, company size and expected EPS growth.
Based on available data as of Jan. 05, 2011, we believe that MPEL should be
trading at $6.16. This makes MPEL 7.65% overvalued. Fair Value indicates what we
believe the stock should be trading at today if the stock market were perfectly
efficient and everything traded at its true worth. For MPEL, we base this on actual
earnings per share (EPS) for the previous four quarters of -$0.15, forecasted EPS for the
next four quarters of -$0.05, and correlations to the 30- year Treasury bond yield of
4.40%.
 You can always screen for top-forecast stocks using our VE software package
or our website.
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MARKET OVERVIEW
Summary of VE Stock Universe
Stocks Undervalued 37.07%
Stocks Overvalued 62.93%
Stocks Undervalued by 20% 16.85%
Stocks Overvalued by 20% 30.14%

SECTOR OVERVIEW
Sector Change MTD YTD Valuation Last 12- P/E
MReturn Ratio
Aerospace -0.36% -0.32% -0.32% 9.33% overvalued 31.14% 19.95
Auto-Tires-Trucks -0.27% -0.17% -0.17% 15.67% overvalued 47.56% 26.33
Basic Materials -1.74% -1.62% -1.62% 32.03% overvalued 63.36% 37.73
Business Services -0.61% -0.50% -0.50% 7.22% overvalued 17.89% 29.89
Computer and Technology -0.52% -0.37% -0.37% 9.40% overvalued 31.72% 44.19
Construction -1.55% -1.47% -1.47% 7.16% overvalued 10.29% 38.15
Consumer Discretionary -0.98% -0.90% -0.90% 6.24% overvalued 23.38% 31.45
Consumer Staples -0.71% -0.63% -0.63% 11.17% overvalued 16.33% 27.8
Finance -0.98% -0.91% -0.91% 8.71% overvalued 17.98% 25.2
Industrial Products -0.84% -0.76% -0.76% 16.92% overvalued 28.74% 26.47
Medical -0.58% -0.49% -0.49% 2.63% undervalued 17.35% 37.72
Multi-Sector Conglomerates -0.75% -0.71% -0.71% 16.45% overvalued 31.28% 30.1
Oils-Energy -0.97% -0.91% -0.91% 26.81% overvalued 33.45% 41.74
Retail-Wholesale -1.53% -1.42% -1.42% 10.14% overvalued 59.31% 22.14
Transportation -0.67% -0.61% -0.61% 13.89% overvalued 27.09% 42.85
Utilities -0.42% -0.40% -0.40% 8.23% overvalued 12.07% 25.52