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MARKET OVERVIEW
Index
DJIA NASDAQ RUSSELL 2000 S&P 500
started week
12720.17 2786.21 784.35 1315.29
Thursday Close
12734.6 2805.28 792.91 1318.43
4 day change
14.43 19.07 8.56 3.14
4 day change %
0.11% 0.68% 1.09% 0.24%
ytd
4.23% 7.68% 7.02% 4.84%
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
-0.52% 0.16% 0.43% 0.00% -0.18% -0.56% -0.26% -0.33% -0.07% -0.12% -0.28% -0.20% -1.01% -0.31% 0.43% 0.24%
MTD
2.82% 11.87% 9.98% 6.08% 7.95% 10.26% 6.15% 5.16% 5.35% 8.80% 5.15% 7.65% 3.84% 5.22% 7.24% 0.73%
YTD
2.82% 11.87% 9.98% 6.08% 7.95% 10.26% 6.15% 5.16% 5.35% 8.80% 5.15% 7.65% 3.84% 5.22% 7.24% 0.73%
Valuation
8.95% undervalued 9.47% undervalued 7.96% undervalued 8.14% undervalued 8.91% undervalued 6.07% undervalued 10.16% undervalued 6.84% undervalued 7.30% undervalued 6.53% undervalued 14.30% undervalued 6.46% undervalued 11.01% undervalued 0.61% undervalued 5.37% undervalued 3.45% undervalued
Last 12MReturn
-11.02% 30.91% -19.09% 4.34% -8.94% -17.01% -3.43% -6.38% -4.69% -5.38% -9.31% 3.93% -14.04% 4.93% -14.21% -0.02%
P/E Ratio
16.46 15.42 23.71 30.19 45.11 39.77 28.58 18.5 20.73 24.93 35.4 14.87 38.64 23.88 20.98 28.79
Name
CALIX INC MARCHEX INC FORMFACTOR INC WEBMD HEALTH CP FSI INTL
Mkt Price
8.46 4.44 5.23 26.84 4.26
Valuation(%)
-44.99 -29.13 -59.92 -34.59 8.16
Name
CALIX INC FORMFACTOR INC OCLARO INC RAMBUS INC MARCHEX INC
Mkt Price
8.46 5.23 4.56 8.92 4.44
Valuation(%)
-44.99 -59.92 -53.25 -59.74 -29.13
Name
SEAGATE TECH MOTOROLA SOLUTN DELL INC NCR CORP-NEW DIRECTV
Mkt Price
19.8 45.33 16.69 17.96 44.54
Valuation(%)
-20.66 -40.12 -14.34 -44.93 -21.89
Name
LEAP WIRELESS STEC INC MIPS TECH INC 8X8 INC HEALTHSTREAM
Mkt Price
9.25 9.66 5.55 4.43 18.52
Valuation(%)
300 208.88 108.47 106.71 95.36
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Out of these four factors, business investment is the only one which will spur the others to move in accord. And this is the only factor which will change our current situation! Of course, these four drivers do not operate in a vacuum. They must be contextualized within the global economy and world trading arena. This task only is quite difficult, and it is not made any easier by the fact that while years have been spent getting the different global financial systems integrated and talking to each other, it remains exceptionally difficult to price securitized derivative instruments. There are literally trillions of dollars of these instruments floating around, and the powers that be have no idea where all that debt will settle. This issue came to a head in July 2007, and we are still sorting out the whole sordid mess. Do these problems indicate a fundamental flaw in the financial system? Or are they just growing pains which derive from the process of international economic integration? For many Americans, exceptionalism is an ingrained belief . Therefore, it is difficult to come to grips with the fact that the United States may lose its dominant position in the world economy. Demographics, debt levels, and other critical factors no longer favor the US as they might have in the 20 th century. In addition, the US now has global competitors such as China, whose labor costs, government policies, and sheer size pose real challenges. If we have similar correlations in 2012 as we saw in 2011, things will be easy. Just follow the direction of the EURO and you can easily discern what the US dollar, gold, and S&P 500 will do. It will also be easy to make the right moves in commodities. But when it comes to the markets, past is rarely prologue. We cannot expect current conditions to persist for another year and it would be foolish to act on such a scenario. We believe in looking at all asset classes and from this intra-market analysis we are given a clearer picture as to where alpha and risk can be both found and avoided.
The VE Global Tactical Asset Allocation strategy has highlighted several asset classes for 2012. For US equities, we believe that the issue of capital investment will be on the front burner-- for both corporate boards and shareholders of these companies-- over the coming year. At this point in the cycle, capital needs to purchase earning power and generate revenue. Even if sales growth is still in the future, a plan for sales needs to be implemented now! We see some potential for the US stock market this year. It appears to finally have some wind at its back for a sustained move to higher prices. Below we outline the S&P 500's activity over the past year and predict the range into which it will settle over the next 12 months. We believe the high of last year will be met in 2012. At that point, gains may be locked for tactical portfolios.
We believe that inflation will be an issue in 2012. However, the type of inflation-core or non-core-- will be most critical. We are most concerned with non-core inflation--which is food and energy.
The German economy is the mother ship for Europe. We believe that there will be a popular safety trade this year, but it will be the German BUND instead of the US Treasury bond.
Want to know what's next for the market and how to position your portfolio for 2012? Participate in our Upcoming Webinar !
Topic: VE Global Tactical Asset Allocation Date: Thursday, February 2, 2012 Time: 3:15 pm, Eastern Standard Time (New York, GMT-05:00) Meeting Number: 311 774 157 Meeting Password: (This meeting does not require a password.)
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--((1.935) My daily and annual value levels are 2.080 and 2.502 with semiannual, quarterly, monthly and semiannual risky levels at 1.902, 1.687, 1.409 and 1.385. Commodities and Forex Comex Gold--($1720.1) Semiannual, weekly, annual and weekly value levels are $1659.5, $$1635.8, $1613.2, $1575.8, $1388.4 and $1569.2 with daily and monthly pivots at $1722.8 and $1706.7, and my quarterly risky level at $1740.9. Nymex Crude-- (($100.40) Semiannual and monthly value levels are $79.83 and $75.53 with daily, monthly, and weekly pivots at $99.42, $99.87 and $100.40, and semiannual and annual risky levels at $104.84, and $103.58 and $117.00. The Euro--(1.3104) Weekly, monthly and quarterly value levels are 1.2783, 1.2780 and 1.2499 with my semiannual pivot at 1.2980, and daily, annual and semiannual risky levels at 1.3286, 1.4239 and 1.4405. Major Indices Equity Technicals The Dow Industrials, S&P 500 and NASDAQ remain above their quarterly pivots at 12,478, 1305.4 and 2777, while the Transports and Russell 2000 remains below their quarterly risky levels at 5448 and 829.03. Equity Fundamentals: 65.3% of all stocks are undervalued / 34.7% of all stocks are overvalued. On October 4th - 93.5% of all stocks were undervalued. All sixteen sectors are undervalued; three are undervalued by double-digit percentages (10.2% / 14.3%). Back in March 2009 the sectors were undervalued by 33% to 45%.
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