May 9, 2014

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VALUATION WARNING: Our models find that overvaluation is at levels typically seen when market pullbacks occur. Overvalued stocks now makeup 69.56% of our stocks assigned a valuation and 26.6% of those equities are calculated to be overvalued by 20% or more. Eleven sectors are calculated to be overvalued by double digits.

MARKET OVERVIEW

Index Started week Ended week 4 day change 4 day change % ytd

DJIA 16509.75 16550.97 41.22 0.25% -0.41%

NASDAQ 4099.25 4051.5 -47.75 -1.16% -3.57%

RUSSELL 2000 1122.22 1097.43 -24.79 -2.21% -5.85%

S&P 500 1879.45 1875.63 -3.82 -0.20% 1.02%

Summary of VE Stock UniverseStocks Undervalued 30.44%

Stocks Overvalued 69.56%

Stocks Undervalued by 20% 9.13%

Stocks Overvalued by 20% 26.60%

SECTOR OVERVIEW

Sector Change MTD YTD Valuation Last 12-MReturn

P/ERatio

Aerospace -0.77% 0.14% 0.22% 16.16% overvalued 37.98% 19.85

Auto-Tires-Trucks -1.10% -1.23% 1.88% 19.87% overvalued 29.87% 18.99

Basic Materials -0.60% -1.75% 2.16% 7.06% overvalued -0.14% 26.31

Business Services -1.58% -3.38% -3.29% 10.10% overvalued 23.63% 26.19

Computer and Technology -0.87% -2.47% -2.92% 8.89% overvalued 21.12% 29.96

Construction -0.75% -0.66% -1.12% 4.94% overvalued 19.99% 23.43

Consumer Discretionary -1.10% -1.99% -5.58% 10.01% overvalued 20.73% 27.23

Consumer Staples -0.29% -0.14% 0.14% 17.44% overvalued 19.81% 23.4

Finance -0.18% -0.46% 0.16% 10.41% overvalued 8.43% 17.34

Industrial Products -0.69% -1.81% -1.80% 11.01% overvalued 23.93% 22.75

Medical -1.38% -2.72% 0.67% 7.26% overvalued 33.59% 28.66

Multi-Sector Conglomerates 0.64% -0.66% 0.34% 17.16% overvalued 10.87% 18.5

Oils-Energy -1.60% -1.70% 11.78% 15.11% overvalued 25.95% 28.38

Retail-Wholesale -0.53% -2.58% -6.34% 9.49% overvalued 13.77% 24.44

Transportation -0.13% -0.48% 0.92% 16.22% overvalued 24.86% 23.64

Utilities -1.00% -0.05% 2.29% 12.13% overvalued 11.80% 21.12

ValuEngine Newsletters Latest Results

VE Newsletter CurrentMonth Total

S&P500

Last MonthTotal

S&P500

SinceInception

S&P500

Forecast MNS -5.00 1.91 0.52 -0.85 98.33 101.74

Dividend Stock -2.26 0.15 2.23 0.52 18.76 20.81

Small Cap Stock -2.30 0.34 -5.91 0.78 30.41 34.97

View 1.09 0.85 1.72 -0.53 101.59 64.45

Sector Talk—ConstructionBelow, we present the latest data on leading Construction 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 Construction Sector Stocks--Short-Term Forecast Returns

Ticker Name Mkt Price Valuation(%) Last 12-MRetn(%)

MTH MERITAGE HOMES 39.23 -19.36 -23.27

MDC MDC HLDGS 27.69 -21.96 -26.63

UFPI UNIVL FST PRODS 49.53 -12.34 27.29

MHO M/I HOMES INC 21.41 -23.11 -18.96

RYL RYLAND GRP INC 37.7 -10.66 -20.08

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

Ticker Name Mkt Price Valuation(%) Last 12-MRetn(%)

MTH MERITAGE HOMES 39.23 -19.36 -23.27

MDC MDC HLDGS 27.69 -21.96 -26.63

UFPI UNIVL FST PRODS 49.53 -12.34 27.29

MHO M/I HOMES INC 21.41 -23.11 -18.96

RYL RYLAND GRP INC 37.7 -10.66 -20.08

Top-Five Construction Sector Stocks--Composite Score

Ticker Name Mkt Price Valuation(%) Last 12-MRetn(%)

CBI CHICAGO BRIDGE 78.96 3.51 38.33

UFPI UNIVL FST PRODS 49.53 -12.34 27.29

LII LENNOX INTL INC 83.71 0.49 32.2

WGO WINNEBAGO 24.77 2.3 28.61

MTH MERITAGE HOMES 39.23 -19.36 -23.27

Top-Five Construction Sector Stocks--Most Overvalued

Ticker Name Mkt Price Valuation(%) Last 12-MRetn(%)

CX CEMEX SA ADR 12.95 45.5 14.14

TPC TUTOR PERINI CP 31.24 44.85 74.14

FWLT FOSTER WHELR AG 33.32 38.05 52.49

OESX ORION ENERGY SY 4.64 25.81 93.2

URI UTD RENTALS INC 92.89 24.13 59.69

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Apple Inc. is engaged in designing, manufacturing and marketing mobile communication and media devices, personal computers, and portable digital music players. The Company's products and services include iPhone, iPad, Mac, iPod, AppleTV, a portfolio of consumer and professional software applications, the iOS and Mac OS X operating systems, iCloud, and a range of accessory, service and support offerings. It sells its products worldwide through its online stores, its retail stores, its direct sales force, third-party wholesalers, and resellers. Apple Inc. is headquartered inCupertino, California.

Today's WSJ features news on the company noting the proposed acquisition of Beats Electronics LLC for @$3.2 billion. This isn't a headphone play. Analysts note that the company is finally making a foray into subscription-based music streaming. The company's iTunes store for music sales has been faltering of late as streaming services such as Pandora and Spotify have become more prominent in the market. If the dealgoes through, it would be Apple's largest acquisition so far.

ValuEngine continues its HOLD recommendation on APPLE INC for 2014-05-08. Based on the information we have gathered and our resulting research, we feel that APPLE INC has the probability to ROUGHLY MATCH average market performance for the next year. The company exhibits ATTRACTIVE Company Size but UNATTRACTIVE Book Market Ratio.

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Read our Complete Detailed Valuation Report on Apple HERE.

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What's Hot--Overaluation Levels Dip to Lowest Levels Since July, 2013

ValuEngine tracks more than 5000 US equities, ADRs, and foreign stock which trade on US exchanges. When EPS estimates are available for a given equity, our model calculates a level of mispricing or valuation percentage for that equity based on earnings estimates and what the stock should be worth if the market were totally rational and efficient--an academic exercise to be sure, but one which allows for useful comparisons between equities, sectors, and industries. Using our Valuation Model, we can currently assign a VE valuation calculation to more than 3600 stocks.

We combine all of the equities with a valuation calculation to track market valuation figures and use them as a metric for making calls about the overall state of the market. Two factors can lower these figures-- a market pullback, or a significant rise in EPS estimates. Whenever we see overvaluation levels in excess of @ 65% for the overall universe and/or 27% for the overvalued by 20% or more categories, we issue a valuation warning. We issued our latest valuation warning on May 8th, 2013. At that time, the S&P was at 1625.

As of yesterday's close, we now calculate that 69.5% of stocks are overvalued and 26.6% of those stocks are overvalued by 20% or more. These levels remain high, but the recent market pull back-- combined with changes in earnings and stock prices-- have resulted in figures that are now the lowest recorded since July 2013.

If the figures continue the decline, we will remove our valuation warning. This does not mean we have a "buy" signal, just that valuations have declined into "normal" range. The current short-term concern is whether or not 2014 will bring us the typical "Sell in May and Go Away" pattern. The recovery seems to be on stronger ground when the recent labor figures are considered, but of course tensions in Ukraine remain high. Regardless, this has been a very long period with high levels of overvaluation.

Subscribers Get FULL ACCESS to our Market and Sector Overviews

The chart below tracks the valuation metrics from January 2014.

This chart shows overall universe over valuation in excess of 65% vs the S&P 500 from January 2013

This chart shows overall universe under and over valuation in excess of 50% vs the S&P500 from March 2007*

*NOTE: Time Scale Compressed Prior to 2011.

In addition to the overall valuation metrics, we see that on a sector basis the declines in overvaluation have also relived some pressure. While ALL sectors remain overvalued according to our Valuation Model, only eleven of them remain calculated to be overvalued by double digits--with three more barely in the double-digit range. This is another indicator that the market is less overheated.

Suttmeier Says--Commentary and Analysis from Chief Market StrategistRichard Suttmeier

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

Treasury Yields10-Year--(2.616) Monthly, weekly and daily pivots 2.616, 2.550 and2.541 with quarterly, annual and semiannual risky levels at 2.333,2.263, 1.837 and 1.779.

30-Year Bond – (3.436) Our monthly value level is 3.586 with daily, quarterly, weekly, annual and semiannual risky levels at 3.362, 3.305, 3.281, 3.283, 3.114, 3.107 and 2.624.

Commodities and Forex

Comex Gold –($1289.4) Quarterly and monthly value levels are $1215.7 and $1170.4 with daily and weekly pivots at $1294.21 and $1287.2, and semiannual and annual risky levels at $1710.6, $1747.4, $1818.8 and $1857.1.

Nymex Crude Oil – ($100.27) Daily, weekly, monthly and quarterly value levels are $99.09, $99.55, $90.39 and $89.40 with semiannual and annual risky levels at $104.74 and $107.52.

The Euro – (1.3844) Weekly, annual, quarterly and semiannual value levels are 1.3778, 1.3382, 1.3185, 1.2642 and 1.2216 with a daily pivot at 1.3884, and monthly and annual risky levels at 1.4171 and 1.5512.

Major Indices

Daily Dow: (116551) Semiannual, weekly and annual value levels are 16245, 16198, 14835 and 13467 with daily and quarterly pivots at 16605 and 16462, the April 4 all-time intraday high at 16631.63 and semiannual and monthly risky levels at 16860 and 17407.

S&P 500 – (1875.6) Quarterly, weekly, semiannual and annual value levels are 1853.5, 1841.2, 1797.3, 1764.4, 1539.1 and 1442.1 with a daily risky level at 1888.1, the April 4 all-time intraday high at 1897.28 and monthly risky level at 2006.7.

NASDAQ – (4051) Quarterly, weekly, semiannual and annual value levels are 4039, 3936, 3930, 3920, 3471 and 3063 with a daily risky level at 4116, the March 6 multiyear intraday high at 4371.71 and monthly risky level at 4581.

NASDAQ 100 (NDX) – (3540) Weekly, semiannual, quarterly and annual value levels are 3426, 3458, 3456, 3424, 3078 and 2669 with a daily risky level at 3594, the March 6 multiyear intraday high at 3738.32, and monthly risky levels at 3960.

Dow Transports – (7704) Weekly, quarterly, semiannual, and annual value levels are 7594, 7517, 7407, 7376, 7256, 7245, 6249 and 5935 with a daily risky level at 77782, the May 8 all-time intraday high at 7775.10 and monthly risky level at 8361.

Russell 2000 – (1097.42) Weekly and annual value levels are 1087.86, 966.72 and 879.39with daily and semiannual pivots at 1114.08, 1133.29 and 1130.29, a quarterly risky level at 1169.22, the March 4 all-time intraday high at 1212.82 and monthly risky level at 1261.38.

The SOX – (577.83) Semiannual, quarterly and annual value levels are 548.36, 507.19, 490.52, 371.58 and 337.74 with daily, weekly and monthly pivots at 581.98, 573.07 and 582.66, the April 3 multiyear intraday high at 601.40 and monthly risky level at 625.61.

Dow Utilities: (547.44) Quarterly, semiannual and annual value levels are 528.10, 524.37, 504.74 and 497.53, with daily, annual and monthly pivots at 544.84, 548.70 and549.73, a weekly risky level at 556.71 and the April 30 all-time intraday high at 558.29.

Stock of the Day

SodaStream (SODA) – ($40.88) SodaStream International Ltd. is engaged in the manufacture of home beverage carbonation systems, which enable consumers to easily transform ordinary tap water instantly into carbonated soft drinks and sparkling water. The Company develops, manufactures and sells soda makers and exchangeable carbon-dioxide (CO 2) cylinders, as well as consumables, consisting ofCO 2 refills, reusable carbonation bottles and flavors to add to the carbonated water. Its products are sold under the brand name SodaStream and Soda-Club. SodaStream's products are environmentally friendly, cost effective, promote health and wellness, and are customizable and fun to use. In addition, the Company's products offer convenience by eliminating the need to carry bottles home from the supermarket, to store bottles at home or to regularly dispose of empty bottles. SodaStream International Ltd. is headquartered in Airport City, Israel.

Analysis – SodaStream has a Hold rating according to ValuEngine and is 6.32% overvalued with fair value at $38.34 and a one-year price target is $38.94. The daily chart shows declining stochastics with the stock below its 21-day, 50-day and 200-daysimple moving averages at $41.30, $41.37 and $51.60. A monthly value level is $32.66 with a quarterly risky level at $65.77.

Richard Suttmeier has been a professional in the US Capital Markets since 1972

transferring his engineering skills to the trading and investment world. He earned a Bachelor of Industrial Engineering degree from Georgia Institute of Technology in 1966, and a Master of Science, Operations Research, Systems Analysis degree from Brooklyn Polytechnic University in 1970. Over the years Richard appeared many times in the financial media, on networks such as CNBC, CNN, CNNfn, New York 1, Bloomberg TV and radio, Fox Business, Business News Network in Canada, Wall Street Week with Fortune, Yahoo Finance Breakout, and the Bill Mazer Radio Show. Richard has been frequently quoted in USA Today, The NY Times, Wall Street Journal, Reuters, and The Dow Jones Newswires.

Now YOU can take advantage of the same market and trading expertise as the financialmedia with Richard Suttmeier's ValuTrader Model Portfolio

The ValuTrader Portfolio Newsletter is based on ValuEngine Chief Market Strategist Richard Suttmeier's proprietary market analytics. Suttmeier combines his technical analysis expertise with ValuEngine's proprietary valuation, forecast, and ratings data for more than 4000 equities trading on US markets to come up with a 20 stock portfolio tailored to current market conditions. With ValuTrader, subscribers access Suttmeier's "Buy and Trade" strategy with a portfolio designed to function well in both up and down markets.

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