*                         1/12     1/19     1/26     2/2/26
S&P 500 Index             6966.28  6940.01  6915.61  6939.03
Trailing 12 month PE      28.81    28.15    27.95    27.93   
Trail Earnings yield      3.47%    3.55%    3.58%    3.58%
Forward 12 month PE       24.19    23.66    23.38    23.44
Fwd Earnings Yield        4.13%    4.23%    4.28%    4.27%
90 day tbill yield        3.62     3.67     3.70     3.67
10 year tbond yield       4.18%    4.24%    4.24%    4.26%
Arezi Ratio               1.04     1.03     1.03     1.02
Fed Ratio                 1.01     1.00     0.99     1.00

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 69%
stocks, 31% cash this week.

Other timing indicators:
The S&P index is above its 200DMA. - Bullish
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 59%.

An alternative allocation, using S=120-30*Arezi Ratio and the first
two of the other timing indicators, produces a target of 89%.

Elan

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