No. of Recommendations: 15
* 3/9 3/16 3/23 3/30/26
S&P 500 Index 6740.02 6632.19 6506.48 6368.85
Trailing 12 month PE 26.44 25.93 25.33 24.72
Trail Earnings yield 3.78% 3.86% 3.95% 4.05%
Forward 12 month PE 22.46 22.04 21.55 21.04
Fwd Earnings Yield 4.45% 4.54% 4.64% 4.75%
90 day tbill yield 3.69 3.72 3.74 3.73
10 year tbond yield 4.15% 4.28% 4.39% 4.44%
Arezi Ratio 0.98 0.96 0.95 0.92
Fed Ratio 0.93 0.94 0.95 0.93
The Arezi Ratio is the 90 day tbill yield divided by the trailing
earnings yield of the S&P500. A low ratio means that stocks are undervalued.
The 'Fed Ratio' is the 10 year treasury bond yield divided by the
forward estimated operating earnings yield of the S&P500. A low ratio
means that stocks are undervalued. Thus, a ratio of 0.71 for example
means, according to Yardeni, that stocks are cheaper than 'fair value'
by 29%.
The 'S=120-50*Arezi Ratio' formula indicates an allocation of 74%
stocks, 26% cash this week.
Other timing indicators:
The S&P index is below its 200DMA. - Bearish
We are in the Nov-Apr part of the year. - Bullish
The trailing PE ratio of the S&P is above 17. - Bearish
The treasury yield curve is normal. - Bullish
A composite allocation may start with the Arezi formula and subtract 10%
for each bearish indicator. The current target allocation is 54%.
An alternative allocation, using S=120-30*Arezi Ratio and the first
two of the other timing indicators, produces a target of 82%.
Elan
